According to the European Commission, the economic sentiment indicator rose by 1.3 points to 95.0, comfortably beating consensus for 94.3. The indicator also rose by the same amount to 95.1 across the wider bloc.
The upturn was seen by all sectors bar construction, while consumer confidence rebounded 1.2 points following a sharp decline in March-April when hostilities in the Middle East were at their peak.
Among individual countries, the ESI rose by 1.3 points in Italy, 0.7 in Spain and 1.7 in Germany, the bloc’s biggest economy, and dipped 0.2 in France. The largest hike was seen in the Netherlands, where sentiment jumped 4.1 points.
However, the Eurozone’s labour market remained under pressure in June, the EC confirmed. The employment expectations indicator had declined "markedly", it noted, losing 2.3 points at 92.9, as businesses within the retail trade, services and construction sectors revised down hiring plans.
Bert Colijn, chief economist, Netherlands at ING, said: "Europe’s worries have shifted from fuel shortages to blistering heat. While also not great for the economy, it is surely preferable to another energy shock. And sentiment among businesses and consumers is cautiously improving.
"For the European Central Bank, the question is how much faith it has in the fragile US-Iran deal. Because at face value, the time to hike already seems to have passed: oil prices have rapidly come down, the economy remains slow and while businesses are still going to pass through higher costs to consumers, the pace with which they plan to do so already seems to be fading.
"But if the deal doesn’t hold and problems resurface, inflationary pressures could swiftly return."
The ESI data were collected between 1 and 22 June.