A new report has shown that German business sentiment plunged further in August, as economic prospects weakened in Europe's biggest economy.
The monthly business climate index calculated by Munich-based economic research institute Ifo fell to 94.8 points from 97.5 in July. Economists had forecast a much more modest drop.
An Ifo statement quoted president Hans-Werner Sinn as saying that 'the German economy is encountering an increasingly more difficult situation'.
A sub-index that measures the current situation fell to 103.2 points from 105.6 in July, while expectations for the coming six months dropped to 87 from 89.9.
Ifo said manufacturing firms were 'markedly more sceptical' about the next six months due to weaker exports.
A separate survey from the GfK institute showed consumer confidence has also fallen further.
Meanwhile, the Federal Statistics Office confirmed an earlier estimate showing that the German economy contracted by 0.5% in the second quarter of this year - the first time this has happened since 2004.
