ECB ups growth forecast to 1.6% and holds rates

Economic growth in the eurozone will finish higher than forecast in 2010, the European Central Bank (ECB) has said.

The ECB expects growth this year to be about 1.6%, up from its June forecast of 1%. Next year it forecasts growth of 1.4%, compared to its previous estimate of 1.2%.

ECB president Jean-Claude Trichet, who also dismissed fears of a double-dip recession, said the optimistic forecast resulted from a recent growth spurt and expects further "positive underlying momentum" going forward.

However, he also warned the figures could be overly-upbeat and sounded a cautionary note over slower growth in other advanced economies - widely interpreted as a reference to the US.

The ECB left eurozone interest rates at 1%, as was widely expected.

The eurozone economy grew 1% in the second quarter.