The IFO Business Climate Index, a measure of corporate confidence in Germany, declined unexpectedly in October, the sixth consecutive monthly fall.

The survey, which is based on 7,000 responses from firms in manufacturing, construction, wholesale and retail, fell to 100.0 this month, from 101.4 in September. Consensus expectations were for a slight improvement to 101.6.

"The clouds over the German economy are darkening," said Hans-Werner Sinn, the President of the IFO Institute.

Both the 'situation' and 'expectations' indices also came in below analysts' estimates.

Analyst Thomas Harjes from Barclays Research said: "We broadly expected stagnating economic activity in the second half of 2012. Today's IFO release, especially the weak assessment of the current situation in October and the broad-based decline across service sectors, however, puts downside risk on our Q4 GDP growth forecast (flat, 0.0% quarter-on-quarter).

"It appears increasingly questionable if domestic demand, primarily household consumption, residential investment and steady public demand, will continue to support the economy sufficiently to offset depressed external demand from most other parts of Europe and waning overseas demand."

Related share prices