Eurozone retail sales rose unexpectedly in October for the first time in three months, showing an improvement in household demand.

The volume of retail trade in the 16-nation euro area jumped 0.5 percent in October, Eurostat data showed on Friday. In the broader European Union, retail sales increased by 0.4 percent.

Markets had expected a 0.2 percent increase in retail sales in October, after dropping consecutively in the previous two months.

Also, eurozone’s retail sales in October went up 1.8 percent compared with the same month last year.

Increase in October retail sales in the region were largely led by the sales of food, drinks and tobacco which rose 1 percent. The non food sector gained 0.1 percent.

Germany, the largest economy in the region, posted the largest increase in retail sales, which was up 2.3 percent in October.

The annual inflation rate remained unchanged in November after inching closer to the European Central Bank's (ECB) target of 2 percent in October.

The European Central Bank (ECB) left the benchmark rates unchanged for the 19th straight month yesterday, and said it would extend its longer-term liquidity tenders into the first quarter of 2011.

The ECB expects inflation to hover around 1.9 percent for the euro area over the next few months.

Further, unemployment rate in the eurozone rose marginally to 10.1 percent in October for the first time in 6 months.

The eurozone is threatened by high unemployment, recurrent sovereign risk problems and slower global economic activity in the coming months, ECB President Jean-Claude Trichet said in a press conference yesterday.

However, the eurozone’s economic sentiment rose to three-year high in November, despite concerns over the sovereign debt crisis in some countries in the region.

The indicator of economic confidence in the 16-nation euro area jumped to 105.3 in November compared with 103.8 in October, the European Commission said on Monday.

A survey from Markit on Wednesday showed manufacturing in the eurozone expanded in November at its fastest pace in four months, boosted by strong activity in France and Germany.