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Euro-Region Retail Sales Increased More Than Forecast in October

Dec. 5 (Bloomberg) -- European retail sales rose more than economists forecast in October, as gains in France and Germany helped offset declining spending in Spain and Portugal.

Sales rose 0.4 percent from September, when they slipped 0.6 percent, the European Union’s statistics office in Luxembourg said today. Economists forecast a gain of 0.1 percent, the median of 23 estimates in a Bloomberg News survey showed. Sales decreased 0.4 percent from a year earlier.

European households may cut spending as governments step up austerity measures to contain the region’s fiscal crisis just as companies start to eliminate jobs. Euro-region unemployment rose to the highest in more than a decade in October and consumer confidence dropped to a two-year low last month.

The European Central Bank will probably lower its benchmark interest rate by another 25 basis points to 1 percent when policy makers meet on Dec. 8, according to a Bloomberg survey of 57 economists. The central bank last month unexpectedly trimmed borrowing costs and forecast a “mild recession.”

“The strong likelihood of euro-zone contraction in the fourth quarter and darkened outlook fully warrant lower interest rates,” said Howard Archer, chief euro-region economist at IHS Global Insight in London. “Interest rates could well come down to 0.5 percent in the early months of 2012.”

In Germany, Europe’s largest economy, retail sales rose 0.7 percent from September, when they advanced 0.3 percent, today’s report showed. French sales increased 0.8 percent and Belgium reported a gain of 0.4 percent. In Spain and Portugal, sales fell 0.8 percent and 3.3 percent, respectively.

The statistics office didn’t provide monthly data for Italy, Greece and the Netherlands.

To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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