German investor sentiment rose for a second straight month in October, with the risks faced by the economy abating somewhat in the recent weeks, a key survey revealed Tuesday.
The ZEW Indicator of Economic Sentiment increased to -11.5 in October from -18.2 in September. This was forecast to rise to -14.9.
The indicator's rise shows that risks for the German economy have somewhat diminished according to the financial market experts, the report noted. This could well be explained by the decreasing uncertainty on the financial markets during the last weeks, ZEW said.
However, the assessment of the current economic situation for Germany has weakened from the previous month. The respective indicator dropped to 10 from 12.6 in the previous month. Economists had forecast a moderate fall to 11.8.
According to ZEW, financial market experts still expect the German economy to cool down instead of brightening up. Nevertheless, the share of experts holding such a pessimistic view has declined compared to the previous month.
"Today's ZEW index adds to the evidence of a soft, not a hard, landing of the German economy," said Carsten Brzeski, an economist at ING Bank NV. "The negative impact of the never-ending euro crisis and, even more important, of the global economic cooling should become visible in the second half of the year."
In a joint economic forecast released this month, leading economic institutes in Germany, including Ifo cut Germany's GDP outlook to 0.8 percent in 2012 from 0.9 percent predicted earlier. The 2013 GDP was cut to 1 percent from previously projected 2 percent.
German Economy Minister Philipp Rosler is due to present the autumn forecast on Wednesday, and is widely expected to predict a GDP growth of 1 percent for next year. The 2012 GDP is seen rising 0.8 percent.
The indicator measuring economic expectations for the Eurozone in October increased by 2.4 points to -1.4. The indicator for the current economic situation, meanwhile, fell by 3.1 points to -79.4.
The European Central Bank's announcement of the bond purchase program in September did have an impact on sentiment.
Meanwhile, European leaders are scheduled to meet in Brussels on Thursday with the Greek issue still unresolved and Spain delaying a bailout.
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