Berlin - German investor confidence recorded a bigger-than -forecast fall in June, 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 slid to minus 52.4 points from minus 41.4 points in May.

Economists had forecast that the index would drop to minus 42.5 points in June as concerns grow about the economic risks posed by soaring inflation have mounted.

This comes against the backdrop of expectations that German economic will slip back a gear as the year unfolds, despite the country9s economy's strong start to the new year.

Earlier this month European Central Bank chief Jean-Claude Trichet placed investors on notice that renewed inflationary pressures meant that the bank's 21-head governing council was sizing up a rate hike when it meets early next month.

The ECB gained extra ammunition this week for a possible 25-basis points rate-hike at its meeting in July when the European Union's statistics office on Monday revised up the May inflation rate in the 15-member eurozone to a 16-year high of 3.7 per cent.

Based on the responses of 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)