BERLIN (AP) — A closely watched survey shows that German business confidence has risen more than expected in December, with sentiment improving in the key manufacturing sector and elsewhere.

The Ifo institute said Monday its confidence index rose to 111.0 points from 110.4 last month. That was slightly higher than the modest rise to 110.6 economists had predicted.

Ifo said that businesses were slightly more optimistic about the next six months than they were in November but that their assessment of their current situation rose more sharply, reaching its highest level since February 2012.

The institute said there was a notable improvement in sentiment among German manufacturers with demand up significantly and order backlogs growing.

The survey is based on responses from some 7,000 firms across the German economy, Europe's biggest.