BERLIN (Reuters) - An improvement in the economic situation of countries around Europe fueled a rise in sentiment among German investors in January, the ZEW economic institute said on Tuesday.

"The fairly good preliminary figures recorded for the development of German GDP last year, as well as for industrial production of the euro zone in November 2016 came as a surprise to many," ZEW President Achim Wambach said in a statement.

"This improvement in expectations can thus also be seen as a leap of faith for 2017," he added.

Euro zone industrial output increased by a much higher-than-expected 1.5 percent in November and the German economy expanded at the fastest pace in five years in 2016.

(Reporting by Michelle Martin and Paul Carrel)