Volkswagen scandal hits German sentiment hard

Sentiment has soured sharply among Germany's economist, analysts and business elite over the Volkswagen scandal. German car maker has installed micro-chip in its diesel cars to cheat environment scrutiny around the world and to push its diesel cars as environment friendly.

• Zew index of current economic sentiment came at 55.2 for October, way below 67.5 reading in September and expectation index fell to 1.9 from 12.1 in September and much below 6.5 reading expected.

The scandal has not only hit Volkswagen, it is threatening to engulf entire diesel car industry, raising doubts whether the cars can be considered as environment friendly. It has scratched German reputation of superior engineering and excellence.

However sentiment isn't the only aspect that has soured, it is likely to reduce investments in the sector, which is likely to sour jobs in auto segment. Focus will be on next month's reading to see whether this dent in sentiment is permanent or just temporary.

Euro has soured from its high above 1.14 and currently trading at 1.137 against Dollar.

German benchmark stock index DAX is currently trading at 10000, down more than 1% for the day so far.