German business sentiment rises above forecasts

Brandenburg Gate
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German business sentiment brightened in November, easing concerns that German's economy is in the doldrums.

A business climate index by the influential Ifo Institute, a Munich-based think tank, rose to 104.7 in November, up from 103.2 in October when it hit its lowest level in almost two years and a sixth consecutive monthly decline.

The November figures reverse that decline and come in above forecasts by analysts polled by Reuters of 103.0.

The German DAX traded 0.5 percent higher after the data was released with investor sentiment buoyed after more worrying data from Germany recently.

Business output fell markedly in Germany in November -- to a 16-month low, according to data released by Markit last week -- adding to disappointing recent growth figures for the largest economy in the euro zone.

Read MoreEuro zone business output fails to meet forecasts

The economy narrowly missed entering a technical recession after data showed it expanded by 0.1 percent in the third quarter, after a contraction in the second quarter.

Following the data, Holger Schmieding, chief economist at Berenberg Bank, told CNBC's "Worldwide Exchange" that the data were important for a number of reasons.

"Firstly, the economic weakness in Europe over the last six or seven months has been largely [from] Germany so positive German numbers are exactly the turnaround needed. Secondly, the German weakness itself was focused on business investment itself and investment is driven by expectations and now that we have , after six months of decline, the first and significant rebound in expectations does suggest that business investment can start to go up again at the end of this year and in the first quarter of 2015."

"It's just one month but the data suggest the worst could be over," he added

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld