German economic sentiment declines unexpectedly in April

German economic sentiment registered an unexpected decline in April, an industry survey showed on Tuesday.

The ZEW Centre for Economic Research said that its index of German economic sentiment declined by 1.5 points to 53.3 in April, falling short of analysts' expectations of a 0.5 improvement.

The unexpected drop could dampen optimism over the health of the Eurozone's biggest economy, while analysts suggested that the decline was attributable to growing concerns over Greece's future.

"The decline in the ZEW follows this month’s fall in the German Sentix investor sentiment index, implying that the worsening Greek crisis is starting to take a toll," said Jennifer McKeown, senior European economist at Capital Economics.

McKeown added that while German consumers responded well to falling inflation and the robust labour market, exports were yet to rise sharply despite the weakness of the exchange rate.

"Further exacerbation of the Greek crisis, involving another default or even Grexit, is a key threat to the recent recovery in business sentiment and hence activity," she said.

The Current Conditions Index improved to 70.2 from 55.1 in March, exceeding expectations for a rise to 56.0, while the index of Eurozone economic sentiment grew to a 14-month high of 64.8 in April from 62.4 in March, above expectations for a gain to 63.7.