Why German sentiment of business should be down. . .

Euro strength affects competition.
Real wages may be falling in Europe.
Countries like Greece are still to recover.
May be a few but European banking is under stress.  As real incomes fall , NPAs will rise, stress should increase. Consumer spending will fall.  

It is a Volatile world...

It is an uncertain world... markets are volatile. Japanese markets today saw a steep rise;  banks in London seem worried; software firms in Germany are not doing as well as it should; in a volatile world, unless there are strong signals from policy makers, people sell and wait on the sidelines. That is what is a normal investor behavior. Credit markets look vulnerable and that is why banks are under pressure. Assets are again leveraged too high?
Higher the risk, higher the return. There are limits to asset growth.