"It is clear that sentiment is still being pressurised by the strong euro, persistently high oil prices, some moderation in global growth and persistently soft domestic demand in many countries," said Howard Archer at Global Insight.
In France, consumer confidence in January remained stuck at December's year-low, according to data from statistics office INSEE on Monday. The index failed to meet expectations for a rise and dealt a blow to hopes for a pick up in the eurozone's second biggest economy.
Improving eurozone sentiment was boosted mainly by positive developments in the service sector, despite a small deterioration in the industrial and construction sectors.
Services confidence increased to 13 from 10, while industry confidence fell to -5 from -4, the consumer index stagnated at -13, retail trade improved to -6 from -7 and construction fell to -14 from -13.
"The results suggest that uncertainties regarding the economic outlook continue to weigh on business sentiment in the European Union and the euro area," the Commission said.
Analysts polled by Reuters forecast that the eurozone's gross domestic product (GDP) will grow 1.8 percent in 2005. European Central Bank (ECB) staff have estimated last year's growth at between 1.6 and 2.0 percent.
Governments fear that eurozone expansion, already much slower than in the United States, is undermined by the strong euro, which makes it harder for firms to be competitive abroad, as high unemployment of 8.9 percent stifles domestic demand.
German Economy Minister Wolfgang Clement has said his country's headline unemployment topped five million in January for the first time since Germany's re-unification after the fall of communism 15 years ago.
The euro was trading on Monday at around $1.2995, off record highs of $1.36 hit in late 2004, but still nearly 60 percent higher than its historic lows in 2000. Another indicator compiled by the Commission, the business climate index, eased in January to 0.40 from a revised 0.44 in December as managers grew more concerned about future production.
Economists polled by Reuters had expected the figure to rise to 0.48.
"The slight change of the business climate indicator was mainly driven by the weakening in the opinions of industry managers concerning production expectations, stock of finished products and production trend in the recent past," the Commission said.
The data reinforced expectations that the ECB would leave its main interest rate unchanged at 2.0 percent on February 3 as economists estimate eurozone inflation to have slowed to 2.3 percent in January from 2.4 percent in December. A flash estimate of eurozone inflation is due on February 4.