By Michelle Martin
BERLIN (Reuters) - German business sentiment dropped for a fourth straight month in August, suggesting concerns about the Ukraine crisis and the impact of sanctions against Russia are sweeping through corporate boardrooms in Europe's largest economy.
The Munich-based Ifo think tank's business climate index, based on a monthly survey of some 7,000 firms, fell to 106.3 from 108.0, undershooting the Reuters consensus forecast for a decrease to 107.0.
That was its lowest level in just over a year and marked the longest period of successive monthly declines in the index since the height of the euro zone crisis in 2012.
The reading raised doubts about the strength of the economy after a surprise second-quarter contraction, sending the euro to a day's low against the dollar and pushing German Bund futures up to a day's high.
"This significant drop leaves no doubt about it - the German economy has passed its peak for now," said Thomas Gitzel, chief economist at VP Bank Group.
"Geopolitical risks are unnerving German firms but even without the various conflicts it would not have been possible for the German economy to grow more," he added.
German gross domestic product (GDP) shrank by 0.2 percent between April and June and the finance ministry has partly blamed this on the Ukraine crisis and sanctions against Russia.
Ifo economist Klaus Wohlrabe said the Ukraine crisis was burdening the economy, though he said the impact was hard to quantify. He said Germany was still far away from recession.
Germany has extensive business ties with Russia, with more than 6,000 German firms active there. Around 10 percent of German exporters send goods to Russia and some of those are concerned that the standoff between Moscow and the West over Ukraine will hurt their business.
Consumer goods group Henkel (DE:HNKG_p) has forecast a tough six months ahead with political turmoil in Russia and German defence firm Rheinmetall (DE:RHMG) has cut its profit outlook.
The value of German shipments to Russia fell 15.5 percent to 15.3 billion euros in the first six months of the year, led by a sharp fall in car and machinery shipments and Ifo said manufacturers were expecting less impetus from exports.
Firms were the most downbeat about their business situation since July 2013 and they also felt more pessimistic about their future prospects than they did last month.
(Reporting by Michelle Martin; Editing by Noah Barkin)