(BERLIN) - German investor confidence improved slightly in August, a key economic indicator suggested on Tuesday, thanks to the recent fall in the price of oil and a weakening of the euro.

The ZEW research institute said its index of economic sentiment stood at minus 55.5 points, up 8.4 points from July when the survey hit its lowest level since its creation in December 1991.

"The recent fall in the price of oil and the fall of the euro against the dollar must have dampened economic concerns about the economy," the ZEW said.

"Market experts have not been particularly taken aback by the negative growth rate of the second quarter. They expect weaker but all in all solid economic conditions and do not fear a recession."

Oil dropped close to 111 dollars per barrel on Tuesday, down sharply from a record high of above 147 dollars on July 11.

The dollar had last week risen to a six-month peak against the euro and to its highest level since January against the yen. A strong euro makes eurozone exports more expensive.

The German economy contracted 0.5 percent in the second quarter compared to the first three months of the year, data showed last week, while eurozone output as a whole fell by 0.2 percent.

The ZEW reading was better than expected. Economists polled by Dow Jones Newswires had forecast it to reach minus 62 points.

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