By Lisa Jucca
BRUSSELS, Feb 4 - Economic sentiment in the 12-nation euro zone improved for the second month in a row in January, suggesting the area may be heading for recovery, the EU Commission's business and consumer survey showed on Monday.
The survey's euro zone economic indicator rose in January to 99.0 from a revised 98.9 in December. Analysts polled by had forecast on average that the indicator would rise to 99.1.
The index for the wider 15-nation European Union rose to 99.3 from 98.9.
"The developments recorded by the economic sentiment indicator in January 2002 seem to confirm the reversal of the negative path followed since the last quarter of 2000," the European Commission said in a statement.
The increase was mainly due to a rise in the industrial confidence component, which was up three points in both the euro area and the EU. But consumer confidence remained broadly flat.
Separately, Eurostat said that euro zone industrial producer prices fell 0.3 percent month-on-month and 1.1 percent against a year earlier.
CAUTIOUS OPTIMISM
Analysts welcomed the improvement in business and consumer confidence, but cautioned from any overly optimistic interpretation since euro zone consumer confidence had not shown the strong performance seen in the United States in January.
"The indicator went up for the second month in a row and it looks like the euro zone economy is turning the corner," Lee Ferridge, head of global currency strategy at Rabobank in London said.
"But it is going to be a gradual process. In the U.S. consumer confidence went up sharply, while in euroland it is only edging back."
The consumer confidence indicator for the euro zone fell by one point in January and was flat in the EU.
By contrast, U.S. consumer sentiment rose for a fourth straight month to its highest level in a year in January.
Some weakness was seen also in the construction and retail trade confidence indicators, which both fell by one-two points in the euro zone and the wider EU.