European unemployment remained at the highest level in almost 14 years in December, suggesting the region's worsening debt crisis and cooling economic growth prompted companies to cut jobs.

The jobless rate in the 17-nation euro region held at 10.4 per cent from the previous month, the European Union's statistics office in Luxembourg said today.

This is the highest since April 1998 and in line with a Bloomberg News survey of economists. It had previously reported a November reading of 10.3 per cent. Europe's rising unemployment may undermine consumer demand

further as governments toughen austerity measures to fight the fiscal crisis. With global export demand cooling, companies are under pressure to reduce costs.

"Crisis countries like Spain and Greece will show further increases in unemployment," said Andreas Scheuerle, an economist at Dekabank in Frankfurt. "That's bad news for consumer demand. We expect the economy to shrink in the current quarter after a contraction in the previous three months."

The euro was higher against the dollar, trading at $1.3197 at 10:02 in London, up 0.4 per cent on the day.

In the 27-nation EU, the jobless rate held at 9.9 per cent from the previous month, today's report showed. About 16.5 million people were unemployed in the euro region, up 20,000 from November, the statistics office said.

In Germany, Europe's largest economy, which has helped power the region's expansion, unemployment dropped more than economists forecast in January to a two-decade low. The jobless rate declined to 6.7 per cent from 6.8 per cent, the Nuremberg- based Federal Labour Agency said today.

At 22.9 percent, Spain reported the highest unemployment rate among EU states. Greece had a jobless rate of 19.2 per cent in October, according to latest available figures. Austria and the Netherlands reported the lowest jobless rate with 4.1 per cent and 4.9 per cent, respectively.

Bloomberg