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Euro zone sentiment unexpectedly improves in October

[October 30, 2014] BRUSSELS (Reuters) - Euro zone economic sentiment unexpectedly rose in October, picking up from a near one-year low in September, in an indication that the bloc's struggling economy may be slowly improving at the end of the year.

Data from the European Commission showed that economic sentiment in the 18 countries sharing the euro, rose to 100.7 in October from 99.9 in September. The 22 economists polled by Reuters had on average expected the number to fall to 99.7.

The improvement was due to all business sectors becoming more optimistic, especially the retail, services and construction sector.

"It was a pleasant surprise, though manufacturing indices had already pointed to an improvement in sentiment," said Peter Vanden Houte, Chief Euro Zone Economist at ING, citing the weakening euro and falling oil prices, as well as an easing of hostilities in Ukraine as factors for the improvement.

Vanden Houte said the ECB probably felt it had done enough to put the economy back on track and would wait to see the full impact of measures already announced.

"With this kind of figure there's little chance the ECB will decide on something new before the end of the year," Vanden Houte said.

The business climate indicator also rose for the euro zone, rising to 0.05, as expected, from a downwardly revised 0.02 in September.

Consumer inflation expectations picked up from the low levels seen in September, to 5.3 from 4.0, a rare uptick since falling almost continuously since December 2013.

Selling price expectations among manufacturers turned positive for the first time since July to 0.2, after a negative 1.9 in September, indicating that fears of deflation in the euro zone may be premature.

(Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop)


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