The marked improvement in Eurozone consumer confidence, as latest data showed, adds to hopes that the region's economy could at least stabilize in the first quarter, following an almost certain third successive quarter of contraction in the fourth quarter, IHS Global Insight Chief European and UK Economist Howard Archer said Thursday.

IHS Global Insight noted that the appreciable improvement in sentiment shows that Eurozone consumers are starting to become more upbeat about the economic outlook, although they still clearly have serious concerns over jobs.

The upturn adds to the evidence that the economic environment in the single-currency bloc has improved, and growth prospects are brightening following recent policy initiatives that have resulted in a substantial easing in sovereign debt tensions, the firm noted.

Preliminary estimate from the European Commission showed that the consumer confidence index rose markedly to a six-month high of -23.9 in January from -26.3 in December and November's 42-month low of -26.9.

However, sentiment is still low compared to long-term norms, while economic fundamentals continue to comprise a pretty unhealthy mix for consumer spending across the currency bloc - high and rising unemployment, generally muted wage growth and tight fiscal policy in many countries, Archer said.

Also, unemployment concerns likely remained elevated, and the suspicion remains that Eurozone consumers will remain pretty cautious in their spending in the near term at least.

On the positive side, meanwhile, consumer price inflation fell back to a two-year low of 2.2 percent at the end of 2012 from 2.5 percent in October and 2.6 percent in September, which could help purchasing power, the economist added.

RTTNews