FRANKFURT (AFP) - Investor sentiment in Germany rose for the first time in five months in September, boosted by the European Central Bank's new bond-buying programme, data showed on Tuesday. The widely watched investor confidence indicator calculated each month by the ZEW economic institute climbed to minus 18.2 points this month from minus 25.5 in August. "This is the first rise in the indicator following four consecutive months of decline," ZEW said in a statement. "The fact that the indicator remains in negative territory shows that financial market experts are continuing to forecast a cooling down of the German economy in the next six months," the statement said. "Nevertheless, the end of the downward slide in September suggests that the experts believe the economic weakening will be only moderate." ZEW president Wolfgang Franz said the announcement by the ECB that it would embark on a new programme to buy up the sovereign bonds of debt-wracked countries had helped to improve the economic outlook "even if the scheme per se is somewhat problematic." "Nevertheless, the debt crisis has not been resolved and the economic risks remain virulent," Franz warned. Earlier this month, the ECB unveiled its latest crisis-fighting machine, known as OMT or Outright Monetary Transactions, under which it will resume its controversial purchase of sovereign bonds. Like its predecessor the SMP, the OMT has come under fire, particularly in Germany where the central bank is vehemently opposed to the plan. But ECB President Mario Draghi recently said the scheme has already helped calm the markets. Since then, overall market sentiment has received a further boost from Germany's Constitutional Court which gave its green light to the eurozone's permanent rescue fund, the ESM. But the ZEW said the ruling did not appear to affect its September sentiment survey. The ZEW reading was nevertheless not quite as positive as had been expected. Analysts surveyed by Dow Jones Newswires had forecast a stronger gain in the indicator to minus 17.0 points. A separate indicator measuring financial market players' view of the current economic situation in Germany fell further to a reading of plus 12.6 points in September from 18.2 points in August. It is now at its lowest level since June 2010. For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months. A frequent criticism against it is that the index can be volatile and is therefore not particularly reliable. Analysts were cheered by the ZEW data. "The relative calm in the euro crisis since the beginning of August seems to have comforted financial analysts," said ING Belgium economist Carsten Brzeski. "The German stock market has increased by more than 10 percent and fears about a looming break-up of the eurozone have also disappeared," he said. Capital Economics economist Jennifer McKeown also said the rise in the index as "fairly encouraging." Nevertheless, the index "remains consistent with a sharp slowdown in the German economy," she cautioned. Berenberg Bank economist Holger Schmieding was more positive, suggesting that the ZEW data could even "flag a turning point for Europe." Core European economies could "return to growth in late 2012 from what is likely to be stagnation at the moment. For that, Germany should say thank you to Draghi," Schmieding said. "We look for a modest economic upswing to take hold across the eurozone over the course of next year, with Germany returning to growth early, Italy following in early 2013 and Spain joining in one or two quarters later," Schmieding said.

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