Investor sentiment in the eurozone worsened in February, due to dissatisfaction with coalition talks between conservatives of German Chancellor Angela Merkel and the center-left Social Democrats (SPD).
Conservatives and SPD are expected to agree on a four-year government program this week.
"Negotiations on the formation of another major coalition are not going the best way from the point of view of investors," said the Sentix research group, adding that the survey looked like a "vote of no confidence in a large coalition."
The Sentix index, which measures investor confidence in the eurozone, fell to 31.9 points in February from 32.9 points in January.
Analysts polled by Reuters, on the contrary, predicted an average growth of the indicator to 33 points.
The mood-tracking index in Germany fell to 36.2 from 40.1 points last month.
The German expectations indicator fell to 5.5 from 11.8 points, reaching its lowest level since July 2016.
According to Sentix, the political measures agreed so far between the conservatives and the SPD have "left investors with a very bad aftertaste."
Company executives in Germany wanted a comprehensive tax reform to make firms more competitive, especially after the US cut corporate tax rates as part of the tax reform.
The Conservatives and the SPD agreed on € 10 billion in tax credits for citizens and want to introduce tax breaks for companies investing in digitalization.
Both measures do not meet the requirements of companies regarding the revision of the tax system.
Sentix reported that 989 investors surveyed continue to view the economic situation in the rest of the world as reliable.
Expectations in the eurozone fell to the lowest level for the year in February, but perceptions of current conditions have improved to the maximum since August 2007, as recovery in the eurozone continued.
The growth of business activity in the eurozone accelerated at the beginning of the year. The combined PMI of 19 block countries in January rose from 58.1 to 58.8 points.
The indicator value has become maximum since June 2006, as shown by the IHS Markit.
"If the current level of (business activity) continues during February and March, the PMI will indicate a 1% quarter-on-quarter increase in GDP (Eurozone) in the first quarter," said Markit chief economist Chris Williamson.
"An estimate of GDP growth of 0.6%, as evidenced by preliminary Eurostat data for the IV quarter of 2017, is likely to be revised upward and closer to 0.8% – the pace indicated by PMI," he added.