BRUSSELS, Jan 9 (Reuters) - Euro zone retail sales unexpectedly increased in monthly terms in November and fell less than forecast year-on-year, data showed on Friday in a rare signal defying deep gloom in the recession-hit economy.
Retail sales in the then 15-country area grew by 0.6 percent from October and shrank 1.5 percent annually -- the sixth straight yearly drop, European Union statistics office Eurostat said.
Economists polled by Reuters had expected November retail trade to be flat month-on-month and down 1.6 percent on the year.
Eurostat revised down its October data to a 1.0 percent fall on a monthly basis and a 2.3 percent decrease annually, compared with previous readings of -0.8 percent and -2.1 percent.
Retail sales are an indication of household demand. Falling private consumption was one of the reasons for a shrinkage in the euro zone economy in the second and third quarters.
Economists expect a deeper recession for the fourth quarter of 2008 and the first three months of this year, and expect the European Central Bank to cut interest rates next week following a fall in inflation to well below the bank's target.
Economists had put some of the blame for weakening household demand on high inflation, which peaked at 4.0 percent in July. Inflation fell to 1.6 percent in December with a drop in oil costs, compared with the ECB's target of just below 2 percent.
Many analysts expect the bank to cut interest rates by 50 basis points to 2.0 percent to help kick-start the economy, in which sentiment indicators fell to all-time lows in December as unemployment crept up.
Eurostat said retail sales of food, drinks and tobacco increased 0.5 percent month-on-month in November and fell 1.3 percent annually. Trade in non-food products was up 0.6 percent and down 1.5 percent respectively.
France, the euro zone's second-biggest economy, reported the strongest retail sales -- up 1.8 percent month-on-month for a 1.6 percent annual gain. Germany posted rises of 0.7 percent and 0.3 percent respectively. (Writing by Marcin Grajewski, editing by Dale Hudson)