  Aims. To investigate the star formation activity and the gas and stellar
dynamics on scales of a few parsecs in the nucleus of the Circinus Galaxy.
Methods.Using the adaptive optics near infrared integral field spectrometer
SINFONI on the VLT, we have obtained observations of the Circinus galaxy on
scales of a few parsecs and at a spectral resolution of 70 km s^{-1} FWHM. The
physical properties of the nucleus are analyzed by means of line and velocity
maps extracted from the SINFONI datacube. Starburst models are constrained
using the Br-gamma flux, stellar continuum (as traced via the CO absorption
bandheads longward of 2.3um), and radio continuum. Results. The similarity of
the morphologies of the H_2 (1-0)S(1) 2.12um and Br-gamma 2.17um lines to the
stellar continuum and also their kinematics, suggest a common origin in star
formation. Within 8 pc of the AGN we find there has been a recent starburst in
the last 100 Myr, which currently accounts for 1.4% of the galaxy's bolometric
luminosity. The similarity of the spatial scales over which the stars and gas
exist indicates that this star formation is occuring within the torus; and
comparison of the gas column density through the torus to the maximum possible
optical depth to the stars implies the torus is a clumpy medium. The coronal
lines show asymmetric profiles with a spatially compact narrow component and a
spatially extended blue wing. These characteristics are consistent with some of
the emission arising in clouds gravitationally bound to the AGN, and some
outflowing in cloudlets which have been eroded away from the bound clouds.
