French consumer confidence at highest in nearly three years

By Ingrid Melander and Jean-Baptiste Vey PARIS (Reuters) - French consumer confidence rose to its highest level in nearly three years in February, adding to signs the euro zone's second-largest economy is slowly lifting itself out of stagnation. The news came hours before the European Commission met to decide on whether to give France more time to cut its public deficit, a move Paris says is needed to allow growth to return. While France theoretically faces a fine, the new EU executive team has switched focus to growth from austerity and is expected to grant it a reprieve in exchange for promises of reform. Consumer spending, once the main driver of France's 2 trillion euro (1.5 trillion pounds) economy, contracted slightly over the past two years, keeping the economy in a lull. However, households were more optimistic in February than they had been since May 2012, official data showed on Wednesday. "This is very positive for the private consumption outlook, it shows that, after saving a large share of their purchasing power gains, French households are now considering spending most of it," BNP Paribas economist Dominique Barbet said. The household confidence index rose to 92 from 90 in January, beating forecasts of 91 and reaching its highest level but still well below its long-term average of 100. Households' views on their future standard of living jumped 4 points and slightly fewer people feared that unemployment would keep increasing. Those indicators also stayed far below the long-term average. January jobless data, due later on Wednesday, will shed more light on any improvement of the outlook for the French economy. Before the figures are published, Prime Minister Manuel Valls will meet employers groups and unions to argue for labour reforms in another attempt to show Brussels the Socialist government is serious about reform. Last week the government adopted a decree to push reforms through a reluctant parliament aimed at liberalising various professions. The bill responds to longstanding demands by the European Commission, which welcomed it as a first step but said more was needed. EU Economics and Monetary Affairs Commissioner Pierre Moscovici said the EU executive in particular sought further labour market reforms. Valls' government is drafting a bill on facilitating labour negotiations after unions and employers failed to reach a deal in three months of talks. But any moves could face resistance from increasingly vocal rebel lawmakers. (Writing by Ingrid Melander; Editing by Alison Williams)