German business confidence falls in June

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Only the construction sector rose, to negative 18.9 from negative 20.2 the month before the fourth rise in succession.

Timo Klein, an analyst with Global Insight in Frankfurt, said he continues to expect an eventual supportive impact from consumer demand, but not as long as oil prices remain above $110 a barrel well below the $136.65 they hit Monday.

"June Ifo data signal that even the Germany economy's astonishing resilience to negative global forces has a limit," Klein said in a research note. He also pointed to strong hints from the European Central Bank that it will likely raise interest rates next month.

"The repeated disappointment of hopes for a downward correction of energy prices, coupled with the most recent ECB announcement of monetary tightening in July, have now hurt business confidence, especially among manufacturers to a greater degree."

The Ifo Business Climate index is based on around 7,000 monthly survey responses from companies in manufacturing, construction, wholesaling and retailing.

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