German investor confidence is continuing to fall

The latest confidence index from the ZEW economic institute fell to -22.2 in September - its lowest level for nearly eight years - from -5.6 in August.

The figure will increase concern about growth in Europe's biggest economy.

ZEW compiles its closely-watched index from speaking to 307 analysts and institutional investors.

'Alarm signals'

The financial markets had only expected this month's figure to dip to -7.8.

Any figure below zero represents negative investor sentiment.

ZEW said that other factors weighing down the index included Germany's plans to increase value-added tax in January, and a possible drop in German exports in light of the slowdown in US economic growth.

ZEW president Wolfgang Franz said the German government "should not ignore these alarm signals".

However, while the German government can do many things to try to help its economy, interest rate levels are out of its hands, being controlled by the European Central Bank (ECB).

The ECB kept rates on hold at 3% in August, but is widely expected to raise them again before the end of the year.