German investor sentiment has improved by more than expected in September in readings that bode well for Chancellor Angela Merkel as she seeks a fourth term in Sunday's national election. As David Pollard reports, an opposition campaign to highlight inequality appears to be gaining little traction with voters.
'Don't enter' warns the sign. But you probably wouldn't want to, anyway. 'Rust belt' isn't a phrase you hear so often in Europe's largest economy - except here. These steelworks once employed 3,000 people ... Now derelict, in what critics say is a trajectory typical of the Ruhr, Germany's mining and heavy industry heartland. (SOUNDBITE) (German) POLITICAL SCIENTIST AT DUESSELDORF UNIVERSITY, STEFAN MARSCHALL, SAYING: "With the death of coal mines, with the competition from the world market and the difficulty of marketing coal in Germany, this whole region has been in the sidings." Immigration is the other headline maker as the country prepares to vote. The latest poll puts Angela Merkel in a clear lead. Though some others suggest the anti-immigration AfD could yet emerge as the 3rd largest party. Merkel's biggest problem still may be: who to choose as coalition partner. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "When compared to all other G7 leaders Angela Merkel has a more benign backdrop to deal with. But we have been here before, haven't we, with elections where markets have been fairly complacent and been surprised. But I think this is fairly low in terms of risk events." And the one risk markets don't see is the economy. Investor sentiment was even higher in September than expected, according to the latest ZEW readings. Proof - if needed - of the positives built up by record employment, rising wages and ultra-low borrowing costs. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "Really, the economy has been performing very well ... We also had a strong export performance, strong growth performance, the return of inflation which has led the euro to strengthen further, a popular move in Germany." Which for Merkel's opponents is bad, not good news, at least in terms of electability. Voters apparently shrugging off the message of inequality touted by the SPD, as it plays to those on the margin. In favour of what they know ..... A chancellor who's already served three terms - and appears certain for a fourth.