(Updates with quote, background)
BRUSSELS, Oct 28 (Reuters) - The Conference Board research group's leading economic index (LEI) for the euro zone rose 1.2 percent to 100.6 points in September, suggesting a continued recovery in the currency area.
The gain followed increases of 1.8 percent in August and 1.7 percent in July, the group said in a statement on Wednesday, adding that seven of the index's eight components contributed positively in September.
"Strong gains over the last six months in the LEIs for the euro area, Germany and France point to a continuing recovery process," Jean-Claude Manini, the Conference Board's senior economist for Europe, said in a statement.
"However, current economic conditions remain weak and the continued downtrend in euro area employment combined with expiring stimulus measures pose a risk of an extended weak growth period following the near-term recovery," he added.
Unemployment in the 16-country euro zone rose to a more than 10-year high of 9.6 percent in August, hurting the prospects for a strong recovery from the worst economic crisis since World War Two.
Economists expect the euro zone's economy to have started growing in the third quarter of this year.
Governments have poured billions of euros into the economy to boost growth, but will have to end their fiscal stimulus as budget deficits increase to dangerous levels.
European Union finance ministers agreed this month that deep cuts to budget gaps in the EU must start in 2011 at the latest if forecasts next month show stable economic growth.
The leading index, which indicates economic development up to six months ahead, aggregates eight economic indicators that measure activity in the euro area as a whole.
The components include the European Commission's economic sentiment index, Eurostat's index of residential building permits granted and index of new orders for capital goods, and the Dow Jones EURO STOXX Index.
It also includes European Central Bank money supply data and interest rate spreads as well as the euro zone Manufacturing Purchasing Managers' Index from Markit Economics and its euro zone Service Sector Future Business Activity Expectations Index. (Reporting by Dale Hudson)