German business confidence falls

The Ifo survey was taken around the time of the US attacks

German business confidence has fallen again, reflecting uncertainty over the effects of the terror attacks in the US, a key report has said.

The business confidence index for August compiled by influential think-tank Ifo showed a drop to 89.5.

The index, which included some data conducted in the wake of the attacks, was widely expected to drop to 89.8.

The drop has wiped out modest confidence gains made over the summer, and leaves the index only marginally above a five-year low, recorded in June.

Ifo's monthly survey of 7,000 German enterprises is one of the most closely-watched indicators on the European financial markets

Time will tell

Gernot Nerb, Ifo's chief economist, said that there was no sign yet that the attacks were exerting yet a significant influence on German business confidence.

"Industry tends to take a calmer and less emotional view of the situation than the financial markets," he said.

"They are more realistic."

But he warned that this situation might change as time goes on.

"It can not be ruled out that the attacks will have more of an effect later," Mr Nerb said.

The relatively glum Ifo figure helped sour the already negative mood on European stock markets, which slumped in early trading.