(BRUSSELS) - Confidence in the combined economy of the 15 nations sharing the euro slumped to a three-year low point in June, according to a widely-watched EU survey released on Friday.

The European Commission's eurozone economic sentiment indicator dropped to 94.9 points in June from a revised 97.6 points the previous month, with consumer confidence sharply down and the manufacturing sector noticeably weak.

It was the lowest the indicator had fallen since May 2005.

Economists had expected it to ease but only to 96.1 points.

"Rising energy and food prices, the ongoing credit crunch, belief that the ECB is set to raise interest rates ... and concerns about the global economic outlook are all weighing down on business and consumer confidence across the eurozone," said Global Insight chief economist Howard Archer.

"There was a particularly large deterioration in consumers' willingness to make major purchases at present," he said.

Jonathan Loynes at Capital Economics noted that "the drop in consumer confidence (to its) lowest reading since 2003, is particularly worrying."

Spain registered the biggest fall among the larger eurozone countries, while declines were more moderate in France, Germany and Italy.

"Spanish households are cutting down on spending amid rising unemployment, a cooling housing market and the run-up in consumer prices," said Lavinia Santovetti from Lehman Brothers Global Economics.

"The Spanish economy is trapped in a vice-like grip of a sharply slowing growth and surging prices," she said.

Confidence in the economy of the broader 27-nation European Union also followed the downward trend, slipping 2.5 points in June from May to 94.6, the survey showed.

The European Commission's separate monthly business climate indicator for the eurozone also declined, dropping to 0.14 points in June from 0.58 in May.

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