BRUSSELS (Reuters) - Unemployment rose in the euro zone to 10.7 percent in January from a revised 10.6 in December, data from the European Union's statistics office Eurostat showed on Thursday.
The December figure was revised up from a previous estimate of 10.4 percent.
"Despite the euphoria in the banking sector following the ECB's loan programme, the real economy remains very depressed and the key factor is the unemployment rate, both socially and because of the damage to growth.
"If you look at Spain's unemployment rate, it is up 2 percentage points in January and even Italy's rate continues to rise, so I am concerned that we really are lacking the fundamental reforms needed for growth.
"There's a huge divergence between the feelgood factor in the stock market and what's happening in the real economy. For all the money the ECB is printing, there isn't yet a big boost for companies in terms of credit.
"Oil is a concern for world growth. We only need a small disruption in the system and we could have oil going $25 or $50 higher, so clearly the market is nervous.
"I think the ECB under Mario Draghi is ready and willing to do anything they can get away with and so taking rates below 1 percent is definitely on the table."
"Today's unemployment report shows that the labour market is remaining very soft, with little upward wage pressures to be expected. Earlier this week the European Commission confidence report showed that inflation expectations have declined somewhat over the last few months both at the consumer and at the producer level.
"The chance of seeing headline inflation fall durably below 2 percent in the course of the year has clearly diminished. In that regard, the ECB staff midpoint inflation estimate of 2 percent for 2012 now looks a bit optimistic and is likely to be revised upwards.
"However we don't believe that the ECB will be strongly concerned with headline inflation remaining higher than expected, as fiscal austerity will continue to weigh on growth, keeping unemployment at an uncomfortably high level.
"With the second LTRO (ECB long-term refinancing operation) a success, it looks as if the ECB is now shifting into a wait-and-see mode. While neither an additional rate cut nor a new LTRO can be entirely excluded should the debt crisis intensify again, the most likely game plan now is the status quo."
"It's a double whammy of bad news for the euro zone with the number of jobless rising by 185,000 in January to take the unemployment rate up to a record 10.7 percent and consumer price inflation edging back up to 2.7 percent.
"This is particularly bad news for consumers, as they are not only facing high and rising unemployment but also still squeezed purchasing power. It had been hoped that euro zone consumer price inflation would be heading down markedly by now, but these hopes are being scuppered by high oil prices.
"The data reinforce our belief that the euro zone is headed for further gross domestic product contraction in the first quarter of 2012 at least, and highlight the problems facing the ECB as to whether it should trim interest rates further.
"It is odds-on that the ECB will keep interest rates unchanged at 1.00 percent at its March 8 policy meeting. Indeed, the ECB seems likely to remain firmly in 'wait-and-see' mode for some time. Even so, we still expect interest rates to be eventually trimmed from 1 percent to 0.75 percent as euro zone economic activity remains soft overall and fragile."
Reporting by Robin Emmott; editing by Rex Merrifield