Berlin - German investor confidence rebounded from record lows with a key indicator released Tuesday posting a surprise increase in November amid government and central bank moves to shore up the economic outlook.

Drawn up by the Mannheim-based Centre for European Economic Research, the ZEW index rose to minus 53.5 rebounding from minus 63 in October amid signs that an element of calm has returned to global share markets after weeks of chaotic selling.

Analysts had forecast that the indicator would remain at about minus 63 in October. The survey represents a key test of sentiment in Europe's biggest economy amid the fallout from the world financial crisis.

Also helping to steady the nerves of investors has been the 50- billion-euro (65 billion dollar) economic stimulus plan and the 500-billion-euro bank rescue package unveiled by Chancellor Angela Merkel's government in recent weeks.

In addition, the release of the ZEW survey came in the wake of a wave of global rate cuts and a weaker euro.

"The earlier pessimistic expectations of the financial market experts are confirmed by the current economic development in Germany," says ZEW President Wolfgang Franz releasing the survey.

"The experts, however, seem hopeful that the collective actions of governments and central banks will mitigate the economic slowdown," he said.

The release of the ZEW survey comes after the index plunged in October amid deepening economic fears following the global share market sell off.

However, the ZEW indicator still remains well below its historical average of 27.1 points.

The release of the index comes as part of the buildup to the publication on Thursday of official data showing Germany slumping into a recession during the third quarter.

The German economy shrank by 0.5 per cent in the second quarter, with analysts expecting that upcoming figures from Germany's statistics office to show a further 0.1 per cent contraction in the quarter which ended September 30.

As a result, Germany will fulfil the technical definition of recession after clocking up two consecutive quarters of negative rates.

Last week, Germany's Economic Ministry said the nation's factory orders plummeted in September by a dramatic 8 per cent to record their biggest drop since records began about 17 years ago, while industrial production sunk 3.6 per cent in September.

However, German exports posted a modest month-on-month rise of 0.7 per cent in September as a weaker euro helped to boost foreign orders for the world's leading export nation.

Data to be published on Friday is also predicted to show France - the 15-member eurozone's second biggest economy - also slipped into recession during the third quarter.

With the eurozone's two largest economies in recession, the European Central Bank is likely to face mounting pressure to follow up this month's 50-basis-points cut with another hefty reduction in borrowing costs in December.

Based on a survey of 287 analysts, the ZEW indicator component measuring the current economic situation in Germany worsened in November 2008, slumping by 14.5 points to minus 50.4 points.

The ZEW survey helps sets the stage for the release later this month of Germany's closely watched Ifo business confidence survey in Munich.

The release of the ZEW survey also comes in the run-up to a summit of the Group of 20 world's biggest economies in Washington at the end of the week which has been called to launch plans for a major overhaul of the global financial sector.

While analysts predict that ZEW survey might indicate a slight improvement in investors' assessment of the German business outlook six months down the track, the indicator's component gauging current economic conditions is likely to have fallen sharply. (dpa)