German business sentiment jumped to the highest level in nearly five-and-a-half years in December as companies grew more optimistic about both current and future business.
The Munich-based Ifo institute said its business climate indicator, based on a monthly survey of around 7,000 firms, rose to 99.6 points in December from 97.8 points in November.
It was the highest reading since 100 in August 2000 and well above the mid-range forecast in a Reuters poll of economists last week for a rise to 98.2.
However, some economists had raised their forecasts following a much stronger-than-expected rise in investor confidence reported by Germany's ZEW institute on Tuesday.
Ifo said its measure of firms' expectations for the next six months rose to 99.6 points in December from an upwardly revised 97.8 in November. Its measure of current conditions advanced to 99.6 points from 97.8.