FRANKFURT (Reuters) - Investor morale in the euro zone broke an eight-month streak of improvements with a bigger-than-expected decline in July, a survey showed on Monday, describing the results as a "bitter setback".

Sentix's index for the euro zone fell to -7.3 points for July from 0.3 in June, putting the barometer firmly back in the red. Analysts polled by Reuters had expected it to drop more moderately to 0.0 this month.

The index on expectations also saw a drop, falling to 1.5 in July from 10.0 in June, a move that Sentix said was "likely to worry forecasters".

"The recent recovery of the European economy has come to an abrupt end," Sentix said.

The survey said that investors were concerned about French elections, upcoming German state elections and uncertainty over the U.S. presidential election later this year.

Germany's economy, Europe's largest, also saw a fall in morale in July, with the index on the current situation declining to -32.3 from -26.3 in June. The drop follows three consecutive months of gains.

The poll of 1,140 investors was conducted between July 4-6, Sentix said.