Berlin - German investor confidence recorded a surprise increase in March to report its fifth consecutive monthly rise, a key indicator released Tuesday showed, amid hopes of a turnaround in Europe's biggest economy later in the year.

After posting its biggest rise in about 16 years in February, the Mannheim-based Centre for European Economic Research (ZEW) said its index measuring the mood among analysts and institutional investors edged up to minus 3.5 points this month from minus 5.8 last month.

The March increase came despite a steady stream of bleak economic data with German exports, industrial production and factory orders falling much more sharply than predicted by economists.

At the same time, the European Central Bank (ECB) has revised down its economic growth projections for the 16-member eurozone predicting the currency bloc's economy will contract by 2.7 per cent this year and stagnate in 2010 as it slowly drags itself out of recession.

This is expected to result in the ECB pressing on with its rate- cutting cycle.

Based on a survey of about 300 analysts, the ZEW indicator often sets the scene for other major European economic sentiment surveys released later in the month, including Germany's closely watched Ifo business confidence survey. (adpa)