Italy business and consumer morale rebound in May after recent falls

ROME (Reuters) -Morale among Italian businesses and consumers rebounded in May after recent declines, data showed on Thursday, offering hope of firmer growth for the euro zone's third largest economy.

National statistics institute ISTAT's composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, rose to 93.1 this month from 91.6 in April.

May's data marked the first increase after three straight drops, with all the business sectors recovering with the exception of construction.

The overall index remained slightly below March's level.

Consumer confidence jumped in May to 96.5 from 92.7 the previous month, ISTAT said, reversing two consecutive declines and coming in well above a median forecast of 93.0 in a Reuters' poll of eight analysts.

The Italian economy grew by 0.3% in the first quarter from the previous three months, a slightly stronger reading than expected, preliminary data showed last month, after the government halved its economic growth estimate for this year to 0.6% amid mounting uncertainty due to U.S. trade tariff policy.

Italy posted growth of 0.7% in each of the last two years.

ISTAT will issue final gross domestic product data for the January-March period on Friday, with a breakdown of the contributions to growth.

(Reporting by Antonella Cinelli, editing by Gavin Jones)