BRUSSELS: Euro zone economic sentiment fell by more than expected in June, as managers of businesses and in factories across the currency area saw little reason for cheer as the region's economy stalls, even in wealthier, northern nations.

The European Commission said yesterday its economic sentiment index slipped by 0.6 points in the 17-nation euro zone to 89.9, compared to the 89.5 point average forecast in a Reuters poll.

It was the index's third consecutive monthly decline and the lowest level since the end of 2009.

As EU leaders met for a summit in Brussels to try to find ways to resolve the debt crisis that has gradually spread across the continent since it began in Greece in January 2010, the mood continued to worsen at businesses.

"The sustained fiscal austerity and 'muddling through' approach to the crisis is clearly taking its toll on economic confidence across the region," said ING economist Martin van Vliet in a note to clients. "Today's figures are a further wake up call to euro zone leaders that... the crisis also needs a short term solution addressing the lack of growth."

Factory managers said they were pessimistic about future orders of goods, from televisions to cars, while production levels and even current export order books - so far kept alive by US and Chinese demand - had deteriorated.

Banking and finance, at the centre of the crisis after Spain requested a rescue for its banks this month, was also depressed, with confidence falling by the greatest margin of all industries and continuing a downward trend since early last year. With one in 10 euro zone workers out of a job, households in southern Europe in particular are struggling and confidence among consumers fell slightly in June, with the Commission citing "increased unemployment fears" as a major factor.

But in a sign that the impact of the crisis is being felt across the bloc and not just in the indebted Mediterranean, economic sentiment fell in Germany, Europe's biggest economy, as well as in the Netherlands, Belgium and Austria.