EU boosts euro-zone growth forecast, trims U.K. (by William L. Watts)

LONDON (MarketWatch) -- The European Commission on Tuesday slightly boosted its forecast for 2011 growth in the euro zone but cut its forecast for growth in the United Kingdom. The Brussels-based commission's interim forecast now calls for gross domestic product to grow 1.6% in the euro zone in 2011, up from its November forecast of 1.5%. The British economy is now expected to expand 2%, down from the commission's November projection of 2.2%. The lower U.K. forecast reflects the unexpected decline in fourth-quarter British GDP, the report said. The commission, which is the executive arm of the 27-nation European Union, said positive economic news, actions taken by member states and expectations for further EU measures have helped ease tensions in sovereign bond markets but noted that the yield premium paid by peripheral euro-zone nations remain elevated.