BERLIN, Oct 17 Reuters German investor morale improved more than expected in October, the ZEW economic research institute said on Tuesday, as market experts forecast a further decline in inflation while warning the economic situation remained challenging.

The institute39;s economic sentiment index rose to 1.1 points from 11.4 points in September.

Analysts polled by Reuters had projected an October reading of 9.3.

It seems that we have passed the lowest point, ZEW president Achim Wambach said.

The expectations index rose for the third straight month, suggesting respondents of this survey expect the economic situation in Germany to improve over the coming six months.

These figures signal that a rebound is coming, but perhaps a little later than previously expected, said Melanie Debono, senior Europe economist at Pantheon Macroeconomics. She noted also that any rebound would likely be unimpressive.

With inflation rates expected to decrease further, threequarters of respondents anticipated stable shortterm interest rates in the euro zone, according to the survey.

Factors such as the IsraelHamas conflict cited by some respondents as a reason for revising their growth forecasts downward had only limited impact on the overall more optimistic outlook, Wambach said.

The assessment of the economic situation in Germany has stabilised, falling by only 0.5 points to minus 79.9 points, the institute said.

This means it has now fallen for six successive months and is at…