UPDATE 1-German investor morale rises more than expected

(Adds detail, economist comment, background)

By Krista Hughes

MANNHEIM, Germany, Jan 20 (Reuters) - German analyst and investor sentiment improved by more than expected in January as the government agreed a second stimulus package to boost Europe's largest economy, a survey showed on Tuesday.

The Mannheim-based ZEW economic think tank's monthly poll of economic sentiment rose to -31.0 from -45.2 in December. A Reuters poll of analysts had pointed to a reading of -44.0 .

The ZEW said the stronger-than-expected rise could be partly due to the second economic stimulus package, which the government agreed last week and which it values at nearly 50 billion euros ($64.89 billion) over two years.

The surveyed analysts and investors expected the stimulus package to have an especially positive impact in the construction sector, the think tank added.

"The aggressive easing of monetary policy and the massive economic rescue package of the German government raise hopes that the economy will stabilise in the second half of the year," said Carsten Brzeski, economist at ING Financial Markets.

German economic growth slipped to a three-year low in 2008, dragged down by a marked slowdown in exports which analysts expect to continue this year and push the country into its worst post-war recession.

The European Commission has forecast the German economy will contract by 2.3 percent this year, and Finance Minister Peer Steinbrueck said on Monday that projection matched the Berlin government's expectations.

Since World War Two, the German economy has not contracted by more than 1 percent in a year.

A separate ZEW index measuring an assessment of current conditions fell to -77.1 from -64.5 in December. The consensus forecast had been for a drop to -71.0.

"We see a downward movement in the current situation but the expectations are rising for the third month in a row," said ZEW economist Michael Schroeder. "Participants expect a trough in the summer of 2009."

Reflecting the bleak economic conditions, German engineering conglomerate Siemens said last week it expected a "subdued outlook for 2009 and especially for 2010".

Large German companies entered the economic downturn and the financial crisis in good condition, giving them a buffer as the economy started to contract, the Bundesbank said on Monday.

However, the German economy's large dependence on exports means it has suffered from its trading partners' economic weaknesses. German exports fell by an unprecedented 10.6 percent month-on-month in November.

German industrial conglomerate MAN AG said on Monday it would stop production of trucks at its German plants for 42 days during the first half of the year due to the economic downturn. (Reporting by Krista Hughes; Editing by Andy Bruce)