Euro zone economic sentiment fell more than expected in August, data showed today, dragged lower by a drop in optimism in industry and in services despite a better mood among consumers, in retail and in construction.

The European Commission's monthly economic sentiment index fell to 97.6 points in August from a downwardly revised 98.9 in July.

This was more than the decline to 98 forecast by economists polled by Reuters.

The fall was the most pronounced in industry with the index down to 1.2 points from 3.4 points in July and in services, where it fell to 8.7 from 10.4 in July.

Meanwhile the index for consumers improved to -24.9 from -27.0 in July and to -6.3 from -7.1 in retail trade.

Inflation expectations in the manufacturing sector also declined to 43.7 from 45.3 in July, continuing a steady downward trend since peaking at 59.3 in April.

Consumers also see less inflationary pressures over the next 12 months with the index falling to 36.8 in August from 42.7 in July, well below the all-time high of 62.8 in March.