In a report, market research group, Sentix said its index of investor confidence improved to minus 7.0 in January from a reading of minus 16.8 in December.
Analysts had expected the index to improve to minus 15.0 in January.
On the index, a level above 0.0 indicates optimism, below indicates pessimism.
The data showed that economic expectations saw an especially strong increase with institutional investors.
Following the release of the data, the euro held on to losses against the U.S. dollar, with EUR/USD dipping 0.24% to trade at 1.3037.
Meanwhile, European stock markets remained lower. The EURO STOXX 50 retreated 0.2%, France's CAC 40 declined 0.4%, Germany's DAX fell 0.4%, while London’s FTSE 100 shed 0.3%.