Mannheim-based think tank ZEW said on Tuesday its monthly survey of German economic sentiment fell 4.7 points in August to 31.5 points - the fifth straight month of decline in the forward-looking indicator.

ZEW President Clemens Fuest said in a statement that economic activity in Germany was still running smoothly, but added: "Under the current geopolitical and global economic circumstances a substantial improvement in Germany over the medium term is unlikely."

While their global outlook is subdued, the 228 German analysts and investors polled by ZEW expect a significant improvement in the eurozone, mirrored by a 4.9-point increase in the sub-indicator for the currency area.

Investor assessment of current eurozone business is also positive as shown by a 4.1-point increase compared with July.

ZEW's August survey undershoots a consensus forecast by news agency Reuters which calculated a rise to 32 points. Alexander Krüger from Bankhaus Lampe, therefore, expects the risks to the global recovery to intensify in the months ahead.

"Among those are sluggish global growth, the expected increase in US interest rates and the ongoing crisis in Greece," he told Reuters.

And Holger Sandte from Nordea Bank told the same news agency that the weakness in emerging market economies as well as uncertainty over Chinese growth were also continuing to dampen investor sentiment.

uhe/ng (Reuters, dpa, AFP)