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Euro-zone retail sales weaker than expected

Euro zone retailers saw their sales grow 0.3% in December from November, and 2.1% over one  year, which was less than expected.

The European Union's Eurostat data agency said the December data brought the increase for the whole of 2006 to 1.4% from 2005.

The result fell short of expectations by private economists for retail sales to grow 1% over one month, and 2.3% over one year.

The data comes ahead of Thursday's interest rate decision from the European Central Bank, which is widely forecast to freeze  borrowing costs at 3.5%  before a possible quarter-point hike in March.

Relatively soft eurozone retail sales in December will not deter the ECB from raising  rates in March, analysts say, though the strength of consumer spending over the coming months could be a key factor in determining if, and when, the ECB  takes interest rates up to 4%.