Meanwhile the ECB's survey of 19,000 euro area consumers showed a similar uptick in expectations last month. Median expectations for inflation over the next 12 months increased for the third month in a row, to 2.8% from 2.6%. However, three years out, expectations were unchanged at 2.4%.

Bank lending to firms in the 20-nation euro area picked up last month, indicating that rapid interest rate cuts have started to flow through to the real economy, despite a gloomy lending survey, European Central Bank data showed on Wednesday.

European stock markets rose and the euro dipped Thursday, with the European Central Bank expected to cut interest rates as inflation eases and the eurozone economy stalls.

FRANKFURT (Reuters) - Lending growth to businesses in the 20-nation euro zone accelerated in December, suggesting that a string of interest rate hikes have started to transmit through to the real economy, European Central Bank data showed on Tuesday.

European Central Bank policymakers backed further policy easing on Friday just a day after the bank's fourth straight rate cut, despite fresh surveys pointing to continued inflation momentum. The ECB cut interest rates to 2.