Euro zone sentiment, inflation expectations dip in April

Tue Apr 29, 2014 7:51am EDT
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By Jan Strupczewski

BRUSSELS (Reuters) - Euro zone economic sentiment deteriorated slightly in April, defying forecasts of further improvement, while inflation expectations continued to fall, European Commission data showed on Tuesday.

The monthly Commission survey showed that economic sentiment in the 18 countries sharing the euro eased to 102.0 in April from 102.5 in March, mainly because of a dip in confidence in the construction sector and in services.

Economists polled by Reuters had expected an improvement to 103.0 in April.

But some economists said the decline could be just a blip as it followed 11 monthly improvements.

"In general, euro zone economic sentiment is still defying the laws of economic gravity," said David Brown, an economist at New View Economics, an independent consulting group.

"Despite the proximity of recession risk, fragile recovery, near record unemployment and chill political headwinds blowing in from the Ukraine, economic confidence is still reasonably upbeat," he said.

But others said the decline could be a sign of the risks that the euro zone recovery faced.

"We interpret the break in this uptrend as a first sign that the gloomier external economic climate will not leave the euro zone economy unscathed," said Christoph Weil, an economist at Commerzbank in Germany.   Continued...

Two men speak on their phones as they walk outside the Bank of Greece in Athens April 9, 2014. REUTERS/Yorgos Karahalis