The mood among German investors fell for the third month running in August, a survey showed on Tuesday, linking the drop to an emissions scandal engulfing the country's car industry. Ciara Lee reports
Germany - the engine of recovery for the euro zone But its other engines continue to cause grief. The mood among German investors fell for the third month running in August That's been linked to the emissions scandal engulfing the country's car industry. First VW's admission in 2015 that it cheated U.S. emissions tests And last month EU antitrust regulators opened an investigation into claims of collusion among German carmakers. The ZEW research institute's economic sentiment index fell to 10 in August from 17.5 in July, undershooting a Reuters forecast of 15. (SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Nobody in the automobile industry should play dumb. There is a preference, particularly with the German automobile industry, that those high up in the businesses are experts and really know the business and it is not really plausible to say 'we didn't know anything.' It must be clearly said. There is an urgent need for clarification. And it makes no sense to brush things under the carpet." Overall the ZEW's outlook for the economy reamins strong. An assessment more in line with a bullish monthly report issued on Monday by the German central bank. And the solid performance is playing into the hands of Chancellor Angela Merkel in the run-up next month's election. (SOUNDBITE) (English) NEIL WILSON SENIOR MARKET ANALYST AT ETX CAPITAL SAYING: "I don't see anything in the way of her winning but even if there were a shock result, I don't think generally it would necessarily be the leve of shock of say for example Brexit, because we are looking at pro-European parties in opposition." Germany has helped the euro zone economy expand for the 17th straight quarter. Giving the ECB room to discuss curtailing its unprecedented stimulus cocktail.