Berlin - German investor confidence rebounded in August, a key indicator released Tuesday showed, despite concerns about the outlook for Europe's biggest economy and volatile financial markets.

Drawn up by the Mannheim-based Centre for European Economic Research, the ZEW index for this month posted a surprise 8.4-points increase to 55.5 points.

Analysts had predicted that the index would fall to minus 62 points in August. The ZEW July index dropped by 11.5 points to minus 63.9 points in July.

The ZEW indicator is the first of Europe's leading monthly sentiment measures to be published for August.

The publication of the ZEW index follows data released last week showing German economic growth contracting by 0.5 per cent in the second quarter amid fears that Europe could be edging its way towards a recession.

But releasing the survey, ZEW president Wolfgang Franz said: "The financial market experts have for good reason not been impressed by the negative Gross Domestic Product (GDP) growth rate in the second quarter of 2008.

"Overall, they reckon with a weaker, but all in all robust economic development and rightly do not fear a recession," he said. (dpa)