Euro zone unemployment falls for first time in two years

The number of people unemployed in the euro zone fell for the first time in more than two years in June, the latest sign that the bloc's economy may be pulling out of recession, while inflation held steady in July, fuelled by spending on food.

Compared with May, 24,000 fewer Europeans in the single currency area were jobless in June, the EU's statistics agency Eurostat said on Wednesday, the first decrease since April 2011.

While too small a number to make an impact on the overall level of euro zone unemployment, which was stable at a record 12.1 percent for the fourth consecutive month, the data reverses the seemingly inexorable rise in joblessness numbers.

Alarming fiscal deficits, budget cuts, falling business confidence and the threat of a euro zone break-up drove the bloc into recession in 2011 and predictions of a rebound have so far proved illusory.

But the European Central Bank's pledge to stand behind the euro zone, a recovering U.S. economy and a lessening of harsh austerity policies have helped economic morale improve, taking it to its highest level in 15 months in July.

Low inflation has also helped households struggling with the impact of the 3-1/2-year euro zone debt crisis. Annual inflation was stable at 1.6 percent in July, according to Eurostat's first estimate for the month, the same level as June.

Spending on food, alcohol and tobacco during Europe's summer heat wave in July were the main factor behind the rise in prices, Eurostat said.

For further details of Eurostat data click on: http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ (Reporting by Robin Emmott)