Sharecast - The ZEW investor expectations index rose to 9.8 from -1.1 in October, coming in above consensus expectations for a reading of 5.0.
Meanwhile, the current conditions index remained depressed, coming in at -79.8 in September versus -79.9 the month before.
ZEW President Achim Wambach said: "Economic expectations for Germany have again increased. At the same time, the assessment of the current situation remains unchanged at a low level. These observations support the impression that the economic development in Germany has bottomed out. The unchanged assessment of the current situation is particularly remarkable given the deterioration in the assessment of the overall economic situation in the eurozone.
"The heightened economic expectations are accompanied by significantly more optimistic outlooks for the German industrial sector and both domestic and foreign stock markets. Inflation and short- and long-term interest rates also appear to have reached turning points in expectations."
Pantheon Macroeconomics said: "Investor sentiment improved in Germany midway through the fourth quarter, in line with the rise in the Sentix reported earlier and overall rebound in risk assets. If the current recovery in equities continue through the month, the December survey should record another increase.
"Overall, investor sentiment data are currently telling a somewhat contrary story on the German and EZ economies. Growth is slowing, economic survey are still poor, and economic forecasts are being marked lower, but investor sentiment suggest that all these indicators will look a lot better by the start of 2024. We are sceptical given the lagged drag from tightening monetary policy, but time will tell."