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Confidence among German companies unexpectedly worsened in April, signaling that a long-expected rebound in Europe’s largest economy may still be some way off.

Sentiment has been on a downward trend for more than a year, interrupted only by occasional gains, and few signs point to an immediate turnaround. The country’s manufacturing sector remains mired in a slump, and the government has slashed its full-year outlook to predicted the weakest economic growth in six years.

Ifo said its closely watched index dropped to 99.2, missing forecasts for an increase to 99.9. A measure of expectations among executives also declined.

The euro extended its decline against the dollar after the report and was down 0.2 percent to $1.1207 as of 10:05 a.m. Frankfurt time. German 10-year bonds rose.

Germany’s struggles, along with rising trade protectionism and a slowdown in China, have weighed on the euro-area economy. The European Central Bank has already prolonged record-low interest rates and held out the prospect of fresh stimulus to support flagging growth.

--With assistance from Harumi Ichikura, Kristian Siedenburg and Catarina Saraiva.

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow

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