German industrial production increased by 1.2% in March compared with the previous month.

The unexpectedly robust performance adds to this week's upbeat signals for Europe's biggest economy.

Economists had forecast that production would decline by 0.1% in March.

Instead, the Economy Ministry reported another increase following a 0.6% rise in February - a figure revised upward today from the initial reading of 0.5%.

The German economy is in better shape than many others in the euro area and is believed to have returned to growth in the first quarter after shrinking in last year's final three months.

Data released yesterday showed a healthy order pipeline - with industrial orders increasing 2.2% in March following an identical rise in February.