Euro zone economic sentiment improved slightly in January after deteriorating for two months, data showed today amid by stronger morale in the services sector and among retailers.
The index based on a survey by the European Commission improved to 100.6 points from a revised 100.3 points, in line with analysts' expectations.
But it was still well below last year's peak of 101.5 points hit in October, posing a question mark over the strength of the economic growth in the 12 nations' single currency area.
"It is clear that sentiment is still being pressurised by the strong euro, persistently high oil prices, some moderation in global growth and persistently soft domestic demand in many countries," said Mr Howard Archer at Global Insight.
Improving euro zone sentiment was boosted mainly by positive developments in the service sector, despite a small deterioration in the industrial and construction sectors.
"The results suggest that uncertainties regarding the economic outlook continue to weigh on business sentiment in the European Union and the euro area," the Commission said.
The ECB has estimated last year's growth at between 1.6 and 2 per cent. Governments fear that euro zone expansion, already much slower than in the United States, is undermined by the strong euro, which makes it harder for firms to be competitive abroad, as high unemployment of 8.9 per cent stifles domestic demand.
The data reinforced expectations that the ECB would leave its main interest rate unchanged at 2 per cent on February 3rd as economists estimate euro zone inflation to have slowed to 2.3 per cent in January from 2.4 per cent in December.
A flash estimate of euro zone inflation is due on February 4th.