Investment sentiment in Germany stalled unexpectedly in January after rising to a seven-year high the previous month, but recovery of Europe's top economy remains intact, a survey has found.

The widely watched investor confidence index calculated by the ZEW economic institute inched down by 0.3 point to 61.7 points in January, ZEW said in a statement. 

Analysts had been pencilling in a further increase after the barometer hit its highest level in more than seven years in December.

But ZEW president Clemens Fuest insisted the latest reading was no real setback.

"Hovering at a high level, economic expectations for Germany have moved sidewards in this month's survey," he said. 

"For months, the surveyed financial market experts have expected an economic upswing. In this month's survey the clearly improved assessment of the current economic situation seems to confirm these expectations," he added. 

For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.

The sub-index measuring financial market players' view of the current economic situation in Germany rose by 8.8 points to 41.2 points in January, its highest level since May 2012.

Analysts said that the strong equity market and the possibility of further action by the European Central Bank have kept German investors in a positive mood. But they added that the ZEW index has not the best track record when it comes to predicting German economic activity.