Germany's Ifo Institute says its index of business confidence, a closely watched gauge of economic activity in Europe's largest economy, has risen after three months of declines.

Munich-based Ifo said Tuesday that its main index rose to 106.7 points from 105.7 points the month before.

The increase was also more than anticipated. Market expectations were for a more modest rise to 106.0 points.

Ifo surveys businesses about their assessment of current conditions and their view of the future, both of which rose in the current survey.

The index is considered a leading indicator, meaning it suggests where the economy may be going in coming months.