UPDATE 1-German Jan retail sales rebound with biggest jump in 6 years

Fri Mar 1, 2013 2:31am EST

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* Monthly jump highest since Dec 2006

* January increase follows steep fall in December

BERLIN, March 1 (Reuters) - German retail sales grew at the fastest monthly rate in more than six years in January, rebounding from a deep fall in December and confirming signs that Europe's largest economy has turned the corner after a dismal end to 2012.

Data from the Federal Statistics Office showed on Friday that retail sales rose a real 3.1 percent from December after a fall of 2.1 percent that month, revised downward from an originally reported 1.7 percent.

That was the highest increase - both in real and in nominal terms - since December 2006 and far surpassed economists' expectations for a 1.0 percent real rise in a Reuters poll.

The notoriously volatile indicator showed retail sales jumped by 2.4 percent on the year in January, up from an upwardly revised 3.7 percent drop the previous month.

Germany's economy shrank in the fourth quarter more than at any time since the height of the 2009 financial crisis, as exports - usually the backbone of the economy - suffered, with euro zone peers in recession and the global economy cooling.

But sentiment indicators reinforce economists' expectations that Europe's growth engine will return to moderate expansion in the first three months of this year, thereby avoiding a recession defined as two consecutive quarters of contraction.

A strong labour market could contribute to German consumers opting to spend rather than save. Data on Thursday showed the number of Germans out of work fell in February and the jobless rate remained close to a post-unification low.

Germany has been criticised for not boosting its domestic demand and expanding at the expense of its neighbours. Strong private consumption - to which firm retail sales point - could be welcome news for Chancellor Angela Merkel who is up for re-election in September.

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