Economists had expected no rise in sales

German retail sales unexpectedly rose in January offering hope that the consumers might be spending again.

The German Statistics Office said January's figure was 3.9% higher than a year ago in nominal terms and 4.2% in real terms.

But weak sales in January 2002, due to the launch of the euro notes and coins, makes the figures look better than they were for the euro zone's largest economy.

Meanwhile in neighbouring France, consumer confidence has dropped to its lowest level in almost six years in February.

French gloom

The French statistical institute, INSEE, said its index was minus 26 compared with minus 22 in January, its lowest level since minus 31 was recorded in May 1997.

"Households are more pessimistic as to the quality of life in France in the months to come and they also consider the current situation not suited to making large purchases," INSEE said in a statement.

Last week, French retail spending for January showed a smaller-than-expected 0.2% fall.

German revival?

In Germany, seasonally adjusted retail sales rose a nominal 0.6% month-on-month and by an inflation-adjusted, or "real", 1.3% in January.

Analysts had expected retail sales to be flat compared with the previous month and down by about 2.3% on January 2002.

That estimate was supported by the HDE retail federation, which on Monday reported this year's January figures would be worse than last year.

Personal consumption dropped for the first time in two decades last year in Germany.

Economic growth hit a nine-year low in 2002 with a rate of just 0.2%.