By Sven Egenter

ZURICH, Nov 5 (Reuters) - Price declines in Switzerland eased in October and consumers took a more optimistic view of the economy and their finances, adding to signs an imminent recovery may be broad-based and deflation risks are fading.

Economists expect the Swiss National Bank to take a more optimistic view on the economy though it is not expected to change its ultra-loose monetary policy until well into 2010.

Swiss consumer prices rose 0.6 percent on the month in October as retailers raised prices for clothes and shoes, the Federal Statistics Office said, and the year-on-year fall eased to 0.8 percent compared with a 0.9 percent drop in September.

The consumer sentiment index, based on a survey conducted in October, rose -30 to from -42 points, the State Secretariat for Economic Affairs (SECO) said, adding to a recent slew of more upbeat news from the Swiss economy.

'The deflation risk, which the SNB has emphasised, will fade over time due to the improved economic outlook,' Credit Suisse analyst Fabian Heller said.

'The SNB is pointing to high uncertainties, but these uncertainties are declining. This should be reflected in the SNB's communication,' he said.

The SNB is widely expected to keep its target rate for the 3-month Swiss franc LIBOR at a record low of 0.25 percent at its Dec. 10 meeting and stick to its unconventional measures which include interventions to fight a rise in the Swiss franc.

CONSUMER RESILIENCE

Signs have been mounting that Switzerland is moving already out of its worst recession in over three decades and the upbeat consumer survey dampened fears that rising unemployment will hit consumer spending hard and slow the recovery.

'Especially the improved job security assessment is a surprise,' said Sarasin analyst Alessandro Bee. 'But it's clearly a positive sign. The data raises hopes, though I do not think that consumption will be a driver for the economy.'

Swiss consumers have proven more resilient to the global downturn than those in some other major economies.

But companies have continued to axe jobs and economists expect the unemployment rate to move above 5 percent and hit levels not seen since the mid-1990s.

All three sub-components of the sentiment index improved -- consumers' assessment of the past, future development of their finances and their assessment of past economic development.

The index for economic outlook even turned positive for the first time since October 2007.

The SECO said it was changing the way it calculates the indicator to make it more forward-looking and bring it more in line with consumer surveys elsewhere.

The new sub-indices cover assessment of the future development of the economy, future unemployment, future personal finances and the chances that the household can save money.

The new index, based on the October survey, also rose to -14 from -39 points in the July survey, the SECO said.

(Reporting by Sven Egenter; Editing by Ruth Pitchford) Keywords: SWISS ECONOMY/SENTIMENT

(sven-markus.egenter@thomsonreuters.com; +41.58.306.7351; Reuters Messaging: sven-markus.egenter.reuters.com@reuters.net)

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