BY TOM FAIRLESS

FRANKFURT—German manufacturing orders rose more than expected in December, driven by a surge in demand from outside the euro zone, in the latest sign that Europe's largest economy may yet avoid recession despite the euro zone's debt crisis.

New orders rose 1.7% on the month in adjusted terms, after slumping by a downwardly revised 4.9% in November, data from the economics ministry showed Monday. Experts polled by Dow Jones Newswires had expected an increase of 1% in December.

While German ...