German analyst and investor sentiment rose for a second month in a row in October, a survey showed on Tuesday, suggesting fears that the euro zone's debt crisis will escalate and damage the bloc's largest economy are easing. The Mannheim-based ZEW said sentiment appeared to have bottomed out, though it remains deep in negative territory and the assessment of current conditions in Germany worsened.
ZEW said its monthly poll of economic sentiment jumped to -11.5 in October from -18.2 in the previous month, beating the consensus forecast in a Reuters survey of analysts for a rise to -15.0 and sending the euro to a session high against the dollar. For a long time Germany's economy seemed impervious to the euro zone's troubles but growth slowed to 0.3 percent in the second quarter from 0.5 percent in the first as firms held back on investments due to uncertainty in the 17-nation bloc.
A German government source said on Tuesday Chancellor Angela Merkel's cabinet would cut its expectations for economic growth next year to 1 percent from a previous 1.6 percent. The government is due to publish growth forecasts on Wednesday. In the ZEW survey, a gauge of current conditions eased to 10.0 from 12.6 in September, missing the consensus forecast in a Reuters poll for a reading of 11.3.
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