BRUSSELS (Reuters) - Consumer confidence in the euro zone improved slightly in June as worries subsided over the currency area's debt crisis, figures yesterday showed, but the longer view remains gloomy, pointing to weak economic growth.

The indicator rose to -17.3 in the 16-country currency area from May's downwardly revised -17.8, the European Commission said in a first estimate. In the whole 27-nation European Union, confidence inched up to -14.9 in June from -15.0 in May.

"It reflects a small strengthening of the labour market and a fading away of panic linked to the sovereign debt crisis. There was a big shock in May and now things appear less traumatic," said Carsten Brzeski, economist at ING.

But spending cuts planned by many euro zone governments to prevent the Greek debt crisis from spreading to other countries are likely to depress consumer morale, which will curb private demand and curtail econoamic growth.

"In all, then, there is a strong risk of renewed falls in consumer confidence to come and still little hope of the consumer revival that would be needed to generate a meaningful economic recovery," said Jennifer McKeown, analyst at Capital Economics.

Consumer morale is critical for bolstering the euro zone's recovery from the worst crisis in decades, which has so far been fuelled mainly by exports.

Analysts say consumers are wary of governments' ending fiscal stimulus programmes after countries were forced to set up an unprecedented aid mechanism of 500 billion euros ($670.9 billion) for the euro zone due to Greece's fiscal woes.

The Commission forecast last month that the currency area's economy will expand by 0.9 percent this year, after shrinking 4.1 percent in 2009.

Despite labour market improvement in some countries, unemployment is expected to remain high — it was near the euro zone's 12-year peak at 10.1 percent in April — restraining people's spending power.