German business confidence fell for a fourth straight month in August as the sovereign debt crisis curbed growth in Europe's largest economy.

The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 102.3 from 103.2 in July. That's the lowest reading since March 2010.

German economic growth slowed to 0.3 per cent in the second quarter from 0.5 per cent in the first as the debt crisis damped demand for exports and prompted companies to postpone investments.

While sales to faster-growing markets outside Europe and domestic spending are helping to insulate Germany from the turmoil, the Bundesbank said last week that the prevailing uncertainty may cause the economy to cool further.

"Recent economic data are not encouraging," said Jens- Oliver Niklasch, an economist at Landesbank Baden-Wuerttemberg in Stuttgart.

"The construction industry as well as the export industry will see a slowdown in the months to come."

Ifo's gauge of the current situation eased to 111.2 from 111.5 in July, while a measure of executives' expectations fell to 94.2, the lowest since June 2009, from 95.5.

The euro rose after the report to trade at $1.2523 at 11 am in Frankfurt, up 0.1 per cent today.