TYPO3 Core

When trying to install TYPO3 8 using an existing empty database, installation fails with the error:

Could not connect to selected database!
Could not connect to database "XYZ"! Make sure it really exists and your database user has the permissions to select it!

Steps to reproduce:

1. Create new MySQL database
2. Create new MySQL user
3. Grant all privileges on new database to the new user
4. Prepare the site 'root' directory (unpack TYPO3 sources) and touch 'FIRST_INSTALL'
5. Use a browser to initiate installation
6. Install Tool - In 'Step 2' enter the DB information (MySQL connection type, username, password, hostname, port)
7. Install Tool - Select database (the database is listed)

After clicking 'Continue' on the step 3/5 this error appears:

In contrast, if only a new user is created and granted privileges to what the new database should be named, Install tool step 3/5 can create the database and proceed with the installation.