The euro rose sharply against the dollar yesterday in the wake of positive data out of Germany, Europe’s biggest economy, analysts said.

In early London deals, the shared eurozone unit climbed to $1.3536 from $1.3472 in New York late on Thursday.

The dollar fell to 82.87 yen from 82.98 yen on Thursday.

“News that German business confidence, the Ifo index, rose to a record high due to booming exports to Asia and stronger household spending growth, helped the euro sustain gains versus all of the majors,” said Kathleen Brooks, an analyst for trading site Forex.com.

German business confidence began the new year at record highs, the Ifo institute said yesterday, good news for the 17-nation eurozone as it grapples with a deep seated debt crisis.

Ifo’s closely tracked reading of business sentiment climbed to 110.3 points in January from 109.8 points in December, its eighth consecutive increase and its second straight record high since the country’s reunification in 1990.

The euro had fallen against the dollar in Asian deals despite signs that eurozone leaders may be preparing a comprehensive response to the sovereign-debt crisis that has roiled markets.

The European currency union, which is facing sovereign-credit downgrades and economic turmoil in its most vulnerable countries, could announce a troubleshooting plan within weeks, analysts said.

The euro on Thursday came under pressure after stronger-than-expected US housing and employment data, David Watt, a senior currency strategist at RBC Capital Markets, told Dow Jones Newswires.

He said a “terrible” auction of 10-year Treasury Inflation-Protected Securities boosted US yields, making the dollar more attractive.

In London yesterday, the euro changed hands at $1.3536 against $1.3472 in New York late Thursday, at 112.18 yen (111.79), £0.8516 (0.8468) and 1.3038 Swiss francs (1.3028).

The dollar stood at 82.87 yen (82.98) and 0.9632 Swiss francs (0.9669).

The pound was at $1.5894 (1.5906).

On the London Bullion Market, the price of gold fell to $1,344.03 an ounce from $1,345.50 late on Thursday.