Berlin - German investor confidence recorded a bigger-than -forecast fall in July, a key indicator released Tuesday showed, as a surging euro, spiralling inflation and worries about higher interest rates hit sentiment in Europe's biggest economy. 

Drawn up by the Mannheim-based Centre for European Economic Research, the ZEW index dropped 11.5 points to minus 63.9 points. 

Economists had forecast that the index would drop from minus 52.4 points in June to minus 55 points this month as concerns have grown about the risks facing the global economy including the fallout from the global financial markets and credit crisis. 

This comes against the backdrop of expectations that German economic growth will slip back a gear as the year unfolds, despite the economy's strong start to the new year. 

Earlier this month, the European Central Bank delivered its first rate hike in more than a year raising borrowing costs in the 15-member eurozone by 25 basis points in a bid to ward off renewed inflationary pressures. 

Based on the responses of about 350 analysts and institutional investors, the ZEW indicator is considered to be a curtain-raiser for the release later this month of Germany's closely watched Ifo business confidence index. (dpa)