Eurozone inflation has remained stable

Confidence in June hit its highest level since the beginning of 2001, at 107.2 on the European Commission gauge, from 106.7 the previous month.

The Commission also said that confidence was up across the European Union (EU) area as a whole.

It also said consumer prices in the eurozone area were up 2.5% in June.

Meanwhile, separate figures from Gfk showed German household confidence rose in June, with a trend towards increased consumption.

But retail sales actually fell in May, puncturing slightly the euphoria of a hoped-for boost ahead of the World Cup.

However, the data is for the month before the tournament started and another, forward-looking, survey from Gfk earlier this week indicated a healthier consumer climate looking ahead to July.

'Growing consternation'

The June prices data show inflation has remained stable, repeating the figure recorded in May.

The figure is above the European Central Bank's (ECB) preferred inflation comfort zone of 2%.

The ECB has raised interest rates three times in six months, including a quarter point rise earlier this month to 2.75%, in the hopes of keeping inflation subdued.

"Eurozone inflation stuck at 2.5% in June is bound to cause growing consternation for the ECB, prompting more concerns that rising inflation expectations are becoming more deeply embedded," said David Brown at Bear Stearns in London.

"With Eurozone economic confidence looking more optimistic at the same time, it will vindicate the ECB's case for another rate hike over the summer."

Ups and downs

Meanwhile, the rise in the sentiment indicator across the EU was boosted by growing confidence in the industrial and retail trade sectors.

The overall EU sentiment figure moved to 108.8 in June from 108.2 in May, also touching a five year high. Italy posted a large improvement, but Germany and France each registered slight declines.

Outside the eurozone, the UK saw its gauge drop to 103.6, the lowest since March, from 105.2 in May.

But Poland was a top gainer with a rise of 4.1 points to 153.1 in June from 149.0 the month before.