Euro zone retail sales drop in March, February revised up

The European Union's statistics office Eurostat said retail sales in the 17 countries using the euro fell 1.0 percent month-on-month in March for a 1.7 percent year-on-year drop.

Economists polled by Reuters had expected a 0.1 percent monthly rise and a flat year-on-year reading.

The March year-on-year decline in the sales figures, which are a good indication of household demand, was the biggest since November 2009, when they fell 2.4 percent in annual terms.

But Eurostat also revised upwards the retail sales data for February -- to 0.3 percent monthly growth from a 0.1 percent decline and to a 1.3 percent annual rise from 0.1 percent.

The European Central Bank meets on interest rates on Thursday and economists will be watching for indications that the bank would aim for a rate rise in June, rather than in July, to stem a rise in consumer prices, fueled by more expensive oil.

Eurostat said the biggest monthly decline in retail sales in the euro zone was in Portugal, where the government is implementing a tough austerity program to regain the confidence of financial markets. Sales volumes were down 4.7 percent from February.

The second biggest monthly drop, of 3 percent, was in Slovenia and the third biggest, a fall of 2.1 percent, was in the euro zone's biggest economy, Germany.

(Reporting by Jan Strupczewski, editing by Rex Merrifield)