BRUSSELS, Feb 5: Business confidence in the euro zone improved in January owing to better outlook for production, the European Commission said on Tuesday.

The commission’s euro-zone business confidence index rose 0.19 points to -1.03 points from -1.21 taking into account the effect of rounding, the commission said. The index had been worsening ever since June 2000, when it reached a peak of 1.78 points.

It fell into negative territory in June 2001, when -0.01 points were registered.

However, in December the index had stabilized in comparison with November.

On Monday, the European statistics institute Eurostat said its economic sentiment indicator for January had shown an increase of 0.1 per cent in the 12-nation euro zone.

Eurostat said that even though the rise was modest, it signalled a reversal of the negative trend seen since the third quarter of 2000.

The economic sentiment indicator takes into account the opinion of big and small companies, the construction sector and consumers.

Meanwhile, the European Central Bank meets on Thursday to reassess its monetary policy stance amid growing expectations it will not cut interest rates immediately.

A large majority in a Reuters poll expect the ECB to hold its key interest rate steady at 3.25 per cent at the meeting, to be held in the Dutch city of Maastricht to mark the 10th anniversary of the treaty that laid the foundation of Europe’s single currency.

INFLATION: Euro zone inflation, the number one factor watched by the ECB, shot up in January on the back of seasonal hikes in food prices, one-off tax increases in Germany and, to a smaller extent, the euro cash rollout.