Euro zone March sentiment stable, inflation expectations surge

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BRUSSELS (Reuters) - Euro zone economic sentiment was virtually unchanged in March against forecasts of a rise, dipping slightly as confidence in industry and services fell, while inflation expectations surged, EU data showed on Thursday.

The European Commission's monthly sentiment survey showed the overall index for the 19-country currency bloc dropping to 107.9 points in March from 108.0 in February, remaining however well above the long-term average of 100.0.

Economists polled by Reuters had expected a slight rise to 108.3 points in March, following strong private data in February.

A separate business confidence indicator, which points to the phase of the business cycle, was stable at 0.82 points in March on the month, remaining at the highest level since June 2011 but below market expectations for an increase to 0.86.

Inflation expectations went up among consumers and manufacturers, in a new sign that price trends in the euro zone are back to a stable growth path and putting pressure on the European Central Bank to end its monetary stimulus.

The consumer index of price trends over the next 12 months went up to 15.3 points from 14.5 in February, the highest since October 2013.

The indicator for selling price expectations among manufacturers also rose to 9.8 points from 9.0 in February, the highest since July 2011.

The slight decrease in overall economic sentiment was mainly caused by less optimism in the services sector, the largest in the euro zone economy, where the index dropped to 12.7 from 13.9 points, and in industry, where it fell to 1.2 points from 1.3 in February.

The drop of confidence in the two main economic sectors of the bloc was partially offset by more optimism among consumers, where the reading was at -5.0 points, confirming earlier flash estimates, and below the -6.2 points recorded in February.

(Reporting by Francesco Guarascio and Philip Blenkinsop)