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Business

German business mood sinks as clouds gather

Sliding for the fifth consecutive month, German business sentiment has hit its lowest level since early 2010, according to a key economic indicator. Overall outlook is marred by pessimism and angst about the eurozone.

The German Business Climate Index fell to 101.4 points in September from 102.3 points in August, the Munich-based Institute for Economic Research (Ifo) said Monday, after polling 7,000 firms in the course of the month.

The institute's sub-index, measuring current business, dropped to 110.3 percent this month, compared with 111.1 points in August, while another sub-index, gauging opinions about business outlook, sunk to 93.2 points from 94.2 points.

"The companies surveyed are again less satisfied with their current business situation, and express greater pessimism about the future," said Ifo President Hans-Werner Sinn in a statement.

The "headwinds" on the German economy continued to prevail, the Ifo president said, as most eurozone countries, except Germany, are facing a return to recession in the third quarter of 2012.

A recent announcement by the European Central Bank (ECB) to buy "unlimited amounts" of sovereign debt from crisis-hit eurozone countries in attempts to lower their borrowing costs failed to boost the Ifo's index.

Economists, polled by Reuters news agency prior to the index release, had expected business sentiment to slightly improve or at least to remain stable on the back of the ECB's decision.

Describing himself to be "strongly disappointed," DEKABANK analyst Andreas Scheuerle told the news agency that the ECB's bond action had apparently only affected financial markets in a positive way.

However, BHF Bank analysts Gerd Hassel told Reuters that he still believes the ECB's bond-buying plan will "improve German business sentiment in the course of the next few months."

uhe/sej (Reuters, AFP, dpa)

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