Berlin  - German households have defied the deepening economic gloom with a survey released Thursday showing consumer confidence in Europe's biggest economy rising more than expected.

Buoyed by government measures aimed at spurring economic growth, the Nuremberg-based GfK marketing institute said its forward-looking consumer confidence index came in at 2.6 points in March compared to an upwardly revised 2.3 points in February.

"The mood among German consumers is improving," GfK said releasing its latest survey. "Stable prices and the bonus for scrapping old cars have triggered a slight improvement in the consumer climate."

Also helping to drive the Gfk indicator was a tick up in German consumers' economic and income expectations as inflation in the country slipped below 1 per cent.

"Consumers can see that their purchasing power is stronger and are consequently assessing their income prospects more optimistically," the GfK said.

Analysts had expected the indicator, which is based on a survey of about 2,000 households to dip back to 2.1 points in March amid a steady stream of bleak economic news from around the world, including mounting job lay offs.

But after four months of decline, the Gfk indicator measuring economic expectations rose five points in February to minus 27.9. However, economic expectations are still down by 42 points from the February 2008 level.

However, German households are hopeful that Chancellor Angela Merkel's government's new 50-billion-euros (64-billion-dollars) economic stimulus package will spur growth later this year.

Moreover, a series of government measures including tax benefits also helped to reverse two months of decline in consumers' income expectations leading to a rebound in the overall index's income expectations component, which increased by 9.5 points in February.

But while the Gfk survey showed consumers' propensity to buy slipped by a marginal 0.9 points to 14.6 points in February, this is almost 30 points higher than the value recorded at the same time in the previous year.

The release of the latest German consumer confidence survey came in the wake of another key indicator published Tuesday showed which business confidence in the nation declining to its lowest level in 26 years dragged down by the industry leaders' assessment of the nation's current economic climate.

However, the indicator's component gauging expectations six months down the track has gained ground on hopes of an economic upturn later in the year. (dpa)