(Adds reading for Greece)
* Inflation expectations rise for first time since December
* ECB expected to ease policy in June to stave off deflation
* Improving job prospects help lift consumer morale
* Economic sentiment in Greece at highest in nearly 6 years
By Martin Santa
BRUSSELS, May 28 Euro zone economic sentiment
improved more than expected in May and inflation expectations
among consumers and companies rose for the first time since
December, European Commission data showed on Wednesday.
Consumer morale rose across the euro zone's biggest
economies, with the notable exception of France, as people
became more optimistic about job prospects, savings expectations
and the general financial and economic situation, the Commission
In Greece, economic sentiment reached its highest level in
almost six years, supporting evidence and official forecasts
that the country's severe recession will come to an end this
Its monthly economic sentiment index for the 18 countries
sharing the euro rose to 102.7 in May from 102.0 in April.
Economists polled by Reuters had expected a rise to 102.2.
Four of the bloc's biggest five economies saw sentiment
improving, led by a rise of 1.3 points in the Netherlands.
France, the euro zone's second-largest economy, registered a
decline of 0.4 points to 96.7, data showed.
On the euro zone periphery, Greece's reading rose to 99.1
points, from 95.4 in April and its highest level since August
2008, the year when the country's debilitating recession began.
"Consumer and business confidence (in the euro zone) is
rising but is still generally diffident about the outlook
ahead," David Brown, analyst at New View Economics, said.
"Uncertainty about global economic prospects, worries about
the crisis in Ukraine and the long wait for additional ECB
easing have been clouding the recent picture," he said.
The bloc's 9.5 billion euro economy posted much
weaker-than-expected growth in the first quarter, dragged down
by the Netherlands, Italy and France, and analysts were cautious
about prospects for the second quarter.
Consumer inflation expectations 12 months' ahead rose to 9.6
points in May from 7.5 in April, reversing a steady decline seen
Selling price expectations among manufacturers edged up to
-1.2 in May from -1.3 in April, but were below -0.7 in March.
Euro zone consumer inflation has been stuck in what the
European Central Bank calls the "danger zone" below 1 percent
since October, mainly because of falling energy and food prices
and the appreciation of the euro.
This creates a risk of deflation, and the ECB has said it
stood ready to react as soon as next Thursday.
ECB President Mario Draghi said on Tuesday the bank was
aware of the risks from prices remaining too low for too long
and the ECB was equipped to get inflation back to its target
Separately, the Commission's business climate indicator,
which points to the phase of the business cycle, rose to 0.37 in
May from a revised 0.28 in April.
"Managers' evaluation of past production improved markedly,
while production expectations, overall order books and export
order books booked more moderate increases," the Commission
[For graphics please see link.reuters.com/bas36s]
(Additional reporting by Harry Papachristou in Athens; Editing
by Susan Fenton)