BRUSSELS -  The EU raised Thursday its eurozone growth forecast, saying the recovery was gaining strength despite the elevated uncertainties of Brexit and the protectionist policies of US President Donald Trump.

The forecast said the positive outlook came in large part thanks to an improving global economy, with the United States and China helping lift Europe.

But the European Commission warned that the "uncertainty surrounding the economic outlook remains elevated".

The 19-country eurozone will grow by 1.7 percent in 2017 followed by 1.8 percent in 2018, the Commission said in its spring economic forecasts.

That is compared with estimates made in February of 1.6 percent and 1.8 percent, respectively.

"It is good news ... that the high uncertainty that has characterised the past twelve months may be starting to ease. But the euro area recovery in jobs and investment remains uneven," EU Economy Commissioner Pierre Moscovici said.

The protectionist stance on world trade by the Trump administration, Britain's divorce from the European Union, and the fragility of European banks could all negatively impact the future of the economy, the Commission said. All eyes were on France, where pressure is building on incoming president Emmanuel Macron to deliver reforms that will put the brakes on the country's high public spending.

The Commission said that the French public deficit this year would land safely on the EU's limit of 3.0 percent of annual GDP, on the back of overall growth of 1.4 percent. But the EU warned that the French deficit would bloat after that, putting France at risk of breaking the EU rules again, and in danger of receiving penalties.

Moscovici, who is a former French finance minister, said a "minimal effort" would allow France to "fall under three percent for the long term".

This was in contrast to European Commission chief Jean-Claude Juncker who on Monday said the EU had "a real problem with France" on public spending, calling on Macron to deliver reforms.

The news was positive for Spain which saw its growth target upgraded sharply and confirming a turnaround from the eurozone crisis when the economy crumbled due to a real estate crash.

Growth in Spain would lead the eurozone main economies with 2.8 percent in 2017, a half point increase over the previous forecasts, the EU said.

Souring the mood, bailed-out Greece, which swung out of recession last year, saw its growth forecast cut sharply to 2.1 percent in 2017 and 2.5 percent in 2018.

The EU said the 28-nation bloc as a whole would grow by 1.9 percent in both 2017 and 2018.

The news was especially positive for non-euro Britain which would continue growing healthily despite the unknowns of Brexit, the Commission said.

The British economy will expand by 1.8 percent in 2017, up from the 1.5 percent forecast three months ago, it predicted.

The Commission said unemployment in the eurozone would continue to fall in 2017, reaching 9.4 percent after ending 2016 at 10 percent.

Meanwhile,London's benchmark FTSE 100 index stagnated and the pound came under pressure Thursday as investors digested a mixed bag of messages from the Bank of England's latest update.

Sterling also suffered from news of falling industrial production in Britain and a widening of the country's trade deficit.

"The British pound is seeing some pressure versus the US dollar following the BoE's decision," analysts at Charles Schwab said.

The Bank kept leading interest rates unchanged and stimulus measures in place, but also crimped its economic growth forecasts.

While noting that the pound cannot expect any immediate support from higher interest rates, analysts also detected a slightly more aggressive tone on future rate hikes from the central bank.

Analyst Peter Ashton from trading firm Eiger FX said there was "arguably a more hawkish undercurrent emerging" at the BoE.

"Two of the key messages given out were that above target inflation can only be tolerated so much, and that rates could rise sooner than perhaps the markets are anticipating."

Ahead of the update, official data showed that UK industrial output slipped 0.5 percent in March to record a third monthly drop in a row.

Markets were reacting to "a ropey set of March data for the UK economy that point to a poor end to a disappointing first quarter", said Howard Archer, chief UK economist at IHS Markit.

- Uncertainty festers -

While the trade deficit hit a six-month high in March on rising imports, "there are signs that UK exports are benefiting from the weakened pound as well as decent global growth", Archer added.

Other European markets were also softer as "global political uncertainty continues to fester" as Charles Schwab analysts put it.

Wall Street opened lower after earnings reports pointed to weakness in the American retail sector.

Earlier Thursday, Asian stock markets rose, with energy firms providing strong support after a jump in oil prices, while the dollar firmed against the yen as a top Federal Reserve official reinforced expectations for further US interest rate hikes.

Both main crude contracts soared almost three percent Wednesday after data showed a drop in US inventories almost three times more than forecast, fanning hopes of rising demand as the American holiday driving season kicks off.

Traders have also been buoyed by hopes that OPEC and Russia's much-vaunted output cuts that started in January appear to be gaining traction, with the key producers also likely to extend the agreement past its end-June deadline.

And on Thursday, the OPEC cartel called on oil producers to make "collective efforts" to match supply and demand in the oil market in the face of rising output in the US.

All of which is welcome news for oil traders after last week's plunge in prices that came on the back of worries about rising US, Nigeria and Libya output, and a slowdown in key market China.

"We saw the biggest draw in inventories for the year last week with stockpiles down more than five million barrels," said Greg McKenna, chief market strategist at AxiTrader.

"And it looks like OPEC's production cut is finally biting," he added.