(Corrects November climate reading in paragraph 2 to 85.8)
BERLIN, Dec 18 (Reuters) - German corporate sentiment deteriorated for the seventh month running in December, with manufacturers of export goods suffering acutely from the global downturn, a closely watched survey showed on Thursday.
The Munich-based Ifo economic research institute said its business climate index, based on a monthly poll of around 7,000 firms, fell to 82.6 in December from 85.8 in November. A Reuters poll of economists had pointed to a reading of 84.0.
Such a low reading has not been seen since German reunification in 1990. Ifo said it had to go back to 1982 to find such a weak index level in the former West Germany.
"No end in sight. The German Ifo index again dropped like a stone in December," said ING Financial Markets' Carsten Brzeski. "The German economy is in the middle of a severe recession but it is still unclear how large this recession will be."
The euro briefly trimmed gains after the weaker Ifo reading bolstered the view that the euro zone economy is weakening and may require more cuts in interest rates.
A Deputy Economy Minister said on Tuesday the German economy may shrink by more than 3 percent in 2009, and leading analysts have predicted a contraction of up to 4 percent -- which would be more than four times worse than the previous post-war nadir.
Highlighting the economic weakness, German automotive supplier Continental AG last week cut its 2008 profitability outlook and said it could omit a dividend for this year.
"The dominant feature of the December decline is the worsening of the firms' current business situation. With regard to the six-month business outlook, the scepticism of the survey participants remains nearly unchanged," Ifo said in a statement.
An index on current conditions fell to 88.8 from a revised 94.9in November. An expectations index eased to 76.8 from 77.6.
(Writing by Paul Carrel)