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Back on track at last? Confidence returns to Europe

European business morale continued to rise in December, with sentiment in the euro zone region back to its long-term average for the first time since July 2011.

The European Commission's monthly business and consumer survey, published Thursday, revealed that economic sentiment rose to 100 in December – up from 98.4 in November. A Reuters poll of analysts had expected the figure to be lower at 99.1.

(Read more: Euro zone economic recovery gathers steam)

In the euro zone area, the uptick in morale was the result of increased confidence among consumers, as well as managers in services, retail and construction.

Indeed, retail trade confidence and construction sentiment saw the biggest rises in the euro area for December, up 2.7 and 3.6 points respectively

While economic sentiment remained the same for Germany and France, it improved in Spain, Italy and the Netherlands, three of the five largest economies in the euro.

(Read more: Euro zone manufacturing grows; France stumbles on)

The business and consumer survey results fall into line with other recent data. On Monday, the latest data fromanalysis firm Markit showed that the euro zone's economic recovery showed signs of gathering pace as services and manufacturing activity in the region expanded in December

Euro zone composite purchasing managers' index (PMI) data showed that activity in the sectors rose to 52.1 in December, up from 51.7 in the previous month. A reading above the 50-point mark indicates expansion.

Chris Williamson, chief economist at Markit, said the PMI surveys indicated that the euro zone recovery gained further traction at the end of last year, but he also warned of an uneven picture – which is backed up by Thursday's survey showing little change from France and Germany in terms of business confidence.

(Read more: Euro zone jobless at record high as retail sales surge)

"While the region as a whole looks set for a strengthening recovery in 2014, growth is uneven, with France in particular having possibly slid back into recession late last year," Williamson said Monday.

In the wider EU, the improvement in sentiment was slightly lower than in the euro area (1.4 compared to the euro's 1.6 increase), with the Commission highlighting that the weaker performance outside the euro was due to an unchanged confidence level in the U.K. The U.K.'s economic sentiment indicator decreased only slightly from 115.2 in November to 115.1 in December.

—By CNBC's Kiran Moodley. Follow him on Twitter @kirancmoodley


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