Venice - The European Central Bank (ECB) meets Thursday amid concerns that the strong performance of the euro could place at risk the fragile economic recovery that has been taking shape across Europe.

Holding one of its regular out-of-town meetings in Venice, the Frankfurt-based ECB is widely expected to keep interest rates on hold at an historic low of 1 per cent and to leave in place the so-called unconventional measures it has launched to shore up market confidence.

However, in the runup to Thursday's meeting of the bank's 22-head rate-setting council, top European officials have been expressing worries about the impact on the 16-member eurozone's exports of the steady rise in the euro, which has gained about 10 per cent since the early months of the year.

Coming against the backdrop of fears that rising unemployment could hit consumer spending in the eurozone, worries about the euro undercutting exports have lead to economic forecasters raising questions about the sustainability of the eurozone's recovery.

The euro jumped to a one-year high of more than 1.48 dollars early this week as a fresh bout of economic optimism helped to drive Europe's common currency forward.

With this in mind, some analysts believe ECB chief Jean-Claude Trichet is likely to repeat at his monthly press conference Thursday the warning made at the weekend of Group of 7 finance officials about the economic and financial risks posed by "excess volatility and disorderly movements" in national currencies.

In addition, Trichet is likely to again point out to financial markets that the US administration backs strong dollar.

Thursday's ECB interest rate announcement will come about one year after the bank joined the world's other top central banks in launching coordinated action to shore up global economic confidence in the wake of the implosion of the US investment bank Lehman Brothers.

Eurozone borrowing costs have been on hold at 1 per cent since April, after the ECB delivered a rapid round of rate cuts aimed at trying to contain the economic and financial crisis triggered by the Lehman Brothers' collapse.

Moreover, weak inflationary pressures combined with a modest economic growth outlook means that many analysts believe eurozone rates could be on hold until well into 2010.

But Australia this week becoming the first member of the Group of 20 leading world economies to raise interest rates.

Consequently, Trichet's comments are likely to be closely watched by analysts for hints as to when the ECB thinks the eurozone might be clear of recession and that it could consider tightening monetary policy.

But since the ECB chief's last press conference earlier in September, data showed eurozone consumer prices falling by 0.3 per cent in September compared to the same month last year.

This left annual inflation well below the ECB's target of inflation coming in at close to but below 2 per cent.

In a report released ahead of Thursday's meeting, the European Union's statistics office revised down its second-quarter economic growth figures saying the eurozone contracted by 0.2 per cent instead of a previously estimated 0.1 per cent.

Economists believe the eurozone returned to an economic growth path during the there months to the end of September after its two biggest economies - Germany and France - unexpectedly climbed out of recession during the second quarter.

But the International Monetary Fund (IMF) warned in its latest review of the world economic outlook that the eurozone faces only sluggish economic growth as it battles to put behind it the world economy's biggest downturn in a generation.

Although marginally better than its last set of forecasts, the IMF expects the economy built around Europe's common currency to contract by 4.2 per cent this year before growing by an anaemic 0.3 per cent in 2010. (dpa)