Eurozone inflation fell less than expected in October and business and consumer confidence improved, prompting speculation of a more hawkish stance from the European Central Bank.
Inflation in the 12-nation single currency area fell to 2.5 percent - less than the 2.4 percent expected by analysts - from 2.6 percent in September, European Union statistics agency Eurostat said in its early "flash" estimate.
Economic sentiment in the euro zone improved for the fifth month in a row in October despite soaring oil prices while long stagnant consumer confidence edged higher, the European Commission said separately on Friday.
"It remains to be seen though whether improved sentiment results in businesses becoming markedly more willing to step up their investment and employment," said Howard Archer, chief analyst at London consultancy Global Insight.
The economic indicator, which reflects general economic activity from business and consumer surveys in the 12 countries using the euro currency, rose to 100.5 points in October from 98.6 in September.
That was above expectations of a rise to 98.9 points in a Reuters poll of economists.
"The improvement was stronger than in previous months, indicating that the economy has overcome the soft patch between autumn of last year and June of this year," the European Commission said in a statement.
The figures come as the European Central Bank has become increasingly hawkish, with policymakers' comments driving interest rate futures to indicate a better than 60 percent chance of a rate hike by year end.
Analysts generally believe, however, that the ECB is still likely to keep its main rate on hold at 2 percent for some time.
The sentiment improvement follows almost uninterrupted falls in the index since October 2004 when a strengthening euro and soaring oil prices hit consumer and business confidence alike.