The President of the European Central Bank (ECB), Mr Wim Duisenberg, has hinted that interest rates are set to rise shortly.

Analysts believe that rates may even be increased as early as next Thursday following very bullish comments yesterday by Mr Duisenberg and the ECB's chief economist, Mr Otmar Issing.

The comments follow the release yesterday of new data pointing to strong growth across Europe. The various purchasing mangers' indices pointed to a pick up across the Continent. The first Irish index was no exception, signalling a further expansion of Irish manufacturing industry and another rise in exports.

According to Mr Colin Hunt, chief economist at Goodbody Stockbrokers, an interest rate rise is now possible as early as Thursday. He pointed out that comments by the ECB vice-president, Mr Christian Noyer, were seen as possibly maverick. But yesterday these were echoed by Mr Issing and Mr Duisenberg.

Mr Duisenberg talked about upward pressure on prices going forward. At the same time, Mr Issing said inflation risks were pointing to the downside but have, since May, been on the upside. The bank cut its borrowing costs by half a percentage point in April amid evidence of tame prices and lacklustre growth. The ECB holds its fortnightly policy-setting meeting on Thursday, and Mr Steve Barrow, currency strategist at Bear Stearns in London, said the ECB is likely to raise interest rates from their current 2.5 per cent.

It was only a few weeks ago that Mr Duisenberg was emphasising that the bias to raising rates was moving at a "snail's pace" and as a result the intensity and consistency of the new message has unsettled markets.

But over the past weeks most of the data coming from the euro zone has been unambiguously positive for growth.

Manufacturing grew at its quickest pace in September in 14 months, according to the Reuters Purchasing Managers Index, while input prices jumped by their fastest rate in over two years.

The news and hawkish comments pushed the euro to a high of $1.0767 in late trade, its strongest since August 6th and up from Thursday's level of $1.0635. It also closed at 64.71p against sterling, compared with 64.58p at the previous close. The pound is trading at the equivalent of 82.19p against sterling. The Irish NCB Purchasing Managers' Index (PMI) which was published for the first time yesterday also signalled a further expansion in the Irish economy.

The index, which is complied by NTC Research which also collates the UK, French and German purchasing mangers indices, showed that the expansion in September is the largest since it first started recording data in April 1998.

This is in line with the other European economies. The NCB PMI has signalled continuous expansion since that time and that rate of growth has accelerated steadily since January, following an easing in the second half of last year.

Order books rose sharply in September as improving market conditions boosted domestic sales. The exchange rate and the continuing recovery of European economies also benefited exporters. The increase in export orders was the largest recorded since May 1998.

NCB chief economist Mr Dermot O'Brien said that rising prices were unlikely to lead into consumer price inflation over the short term. Prices have now risen for three consecutive months, having fallen continuously for the previous 13 months.