German business sentiment unexpectedly rose to its highest level in more than 14 years in February, according to a closely watched survey.
The Munich-based Ifo institute said its business climate index, based on a monthly survey of around 7,000 firms, rose to 103.3 from an upwardly revised 101.8 in January.
It said the sentiment was fuelled by rising confidence among manufacturers and retailers. The Ifo rise was the third in succession, and took the index to its highest level since October 1991.
Ifo President Hans-Werner Sinn said the data showed that a trend under way since the summer of last year was continuing and that sentiment was broadening across the economy.
"In addition to exports, domestic demand appears to be gaining momentum as well," he said. "Retailers reported an improved current situation and noticeably more optimistic expectations for the coming six months."
The euro rose to its top levels of the day against the dollar following the data, moving as high as $1.1942.
A breakdown of the Ifo data showed that construction sentiment, which has improved steadily since last summer, also improved in February, with wholesalers also more upbeat.
The mid-range forecast of 56 economists polled by Reuters last week was for the index to fall to 101.5.