German business sentiment rose in September though it fell short of analysts' expectations, according to the latest data from the country's closely watched Ifo business climate index.
The index rose to 107.7 in September, up from a revised figure of 107.6 in August. Analysts polled by Reuters had forecast a rise to 108.2 this month, however.
The survey of business conditions in Germany across a range of sectors including manufacturing and retail also showed a mixed picture. The numbers for current business conditions and business expectations came in just below and just above analysts' expectations, respectively.
The survey follows positive manufacturing and services output data from France, Germany and the euro zone on Monday, fueling hopes that the region's recovery will continue and that the euro zone's largest economy, Germany, will lead it.
(Read more: Euro zone PMIs boost hopes of broad-based recovery)
"Today's Ifo provides further evidence that fears about a sharp slowdown of the German economy in the second half of the year were overdone." Carsten Brzeski, senior economist at ING, told CNBC following the data.
"The gradual filling of order books since the beginning of the year combined with some inventory reduction bodes well for industrial production in the coming months. The recoveries of the U.S. and U.K. economies, signs that the Chinese landing is a soft rather than a hard one and the tender stabilization of the euro zone economy should support German exports." Brzeski added.