According to Ifo institute's Business Sentiment Index released on Wednesday, optimism has continued to grow in Europe's largest economy, resulting in a rise of the barometer from 106.8 points in February to 107.9 points in March.

The reading for this month was the highest since July 2014 and marked a streak of five consecutive months of gains, Ifo said in a statement.

"Companies were more satisfied with their current business situation. They also expressed far greater optimism about future business developments," said Ifo president Hans-Werner Sinn.

After gauging opinions from about 7,000 German business leaders, Ifo concluded that the German economy would "continue to expand" in the months ahead.

The trend was reflected by rises in both the companies' assessments of current business and their outlook for the next six months. The sub-index measuring current business rose to 112.0 points from 111.3 points, while the outlook sub-index increased by 1.4 points to 103.9 points, the institute said.

Holger Sandte, analyst with Nordea Bank, told the Reuters news agency that rising confidence about future business was the most important good news in the Ifo March index.

"This indicates that businesses are eventually giving up their reluctance to invest, meaning the upswing in Germany will be based on broader foundations," he added.

And Andreas Scheuerle from Dekabank told the same news agency that this month's figures would bode well for robust economic growth in the first quarter of this year.

The German economy grew by a stronger 0.7 percent in the fourth quarter of 2014, shrugging off the temporary lull in the preceding quarters. The expansion in gross domestic product (GDP) lifted growth for the whole year to 1.6 percent.

uhe/kc (AFP, dpa, Reuters,)