Swedish Riksbank hikes interest rate to 0.75 pct

STOCKHOLM (AP) - The Swedish central bank has raised its key interest rate by a quarter of a percentage point to 0.75 percent, citing the pickup in exports and an improved labor market.

The Riksbank on Thursday said the rapid increase in world trade has boosted Swedish exports and investments, and that economic growth this year would be higher than previously expected - it is now predicting GDP growth of 4.1 percent, up from July's forecast of 3.8 percent.

Still, it warned that modest growth in the eurozone and a more protracted recovery in the U.S. could dampen developments in Sweden in the long run. It lowered its 2011 GDP forecast to 3.5 percent from 3.6 percent.

The Riksbank reiterated its aim to raise interest rates gradually toward more normal levels.