Uncertainty continued to gnaw at investors' confidence as German business mood worsened for a fifth straight month in September and Spain resisted outside pressure to apply for aid.

German business confidence fell to its lowest level in September, confounding market expectations for a slight rise, the Munich-based Ifo economic institute said Monday.

The dire figures have stoked concerns that the biggest economy in Europe has gradually lost its resilience to the chronic debt crisis, which is showing signs of rebound despite a bold bond-buying plan laid out by the European Central Bank (ECB).

Ifo's survey showed that the business climate index for Germany, based on a monthly survey of 7,000 executives of firms in manufacturing, construction, wholesaling and retailing, was down to 101.4 points from 102.3 in the previous month.

"The companies surveyed are again less satisfied with their current business situation," said Ifo President Hans-Werner Sinn. "They also expressed greater pessimism about the future."

As the economic powerhouse and main exporter in Europe, Germany has not shielded itself from the ongoing eurozone debt crisis. Its economy contracted by 0.2 percent in the last quarter of 2011 and is forecast to grow by only 0.7 percent this year.

Fuelling more anxiety in the financial market, Spain has held back from requesting a widely-expected international bailout due to election considerations, pushing up its government bond yields.

Madrid was facing an important regional election on Oct. 21. Prime Minister Mariano Rajoy, fearing for losing voters' support, refused to yield to outside pressure to seek an international aid, thus deepening investors' concerns about other troubled countries' debts.

Joaquin Almunia, vice-president of the European Commission and Commissioner responsible for competition, on Monday warned against higher risks incurred by market uncertainty if Spain insists on dragging its feet in requesting the bailout.

Underlining no strings come with a fresh bailout, Almunia urged Spain, the fourth largest economy in the euro zone, to make a quick decision on the bailout plan.

"What's highly risky is to maintain the uncertainty -- because you can come to a time when the cost of that uncertainty is bigger than any decision," Almunia as quoted as saying.

Investors were expecting the Spanish government to act promptly and ask for the international bailout, a precondition for the ECB to tap its bond buying program.

This week, Spain is expected to unveil its draft budget plan for 2013 and a new structural overhaul, including fixing its rigid labor markets.

The country has been plagued by a high unemployment rate, with its long-term jobless people nearing 3 million, according to a latest report released by temporary employment association AGETT.

The Spanish Confederation of Business Organizations (CEOE) said Wednesday that the country's unemployment rate will reach 25.2 percent in 2012 and 26.5 percent in 2013.

The Spanish government forecasted that the economy would contract by 1.5 percent in 2012 and 0.5 percent next year.