Sluggish euro zone recovery confirmed in fourth quarter
* Exports, investments drive euro zone recovery * January retail sales rebound is stronger than expected By Martin Santa BRUSSELS, March 5 (Reuters) - Rising exports and a gradual improvement in investments were behind the euro zone's stronger-than-expected growth in the last quarter of 2013, data showed on Wednesday. The 9.5-trillion-euro economy rose by 0.3 percent in the October-to-December period, a figure that compared to 0.1 percent growth in the previous three months, the European Union's statistics office Eurostat said. The fourth-quarter expansion came on the back of a 1.2 percent rise in exports in the period and a 1.1 percent rise in investments. The improving economic outlook provides some breathing space for the European Central Bank before Thursday's policy meeting. The ECB is expected to show how it wants to fight disinflation pressures that could threaten the recovery. Compared with the same period last year, the euro zone's economy rose 0.5 percent in the fourth quarter, returning to annual growth for the first time in two years. Europe's biggest economy Germany showed a robust 0.4 percent expansion in the fourth quarter, when compared with the previous three months, and growth of the second largest economy France accelerated to 0.3 percent after being flat in third quarter. The European Commission said last month it expects Germany to accelerate away from France and Italy in 2014 as the euro zone economy gradually recovers from its worst crisis. In a departure from the gloom of recent years, Brussels slightly increased its growth prediction for the bloc's economy to 1.2 percent this year from an earlier 1.1 percent. STRONG RETAIL SALES A separate data release on Wednesday showed a much stronger rebound in retail sales in January. The euro zone's volume of retail sales jumped 1.6 percent on the month after a revised 1.3 percent drop in December. Compared with the same period of the last year, there was a 1.3 percent growth in January, following a revised 0.4 percent drop in December. Analysts polled by Reuters expected a 0.8 percent rise on the month. Germany saw a 2.5 percent monthly jump in January and France booked a 1.2 percent rise. Despite a gradual pick-up in growth, household demand across the euro zone remains weak as the bloc suffers from near record unemployment, notably among young Europeans, keeping a lid on Europeans' spending. But in a sign of the improving situation in southern Europe, Portugal witnessed a 6.7 percent rise in volume of retail sales in January, when compared with December.