* Euro zone to grow in Q3 -Italy, Slovak central banks
* Trichet, Mersch-exit process can be triggered when needed
* Trichet declares excess FX volatility an enemy
* Trichet warns debt levels worrying in some countries
* Economy stabilising, ECB happy with non-standard measures
By Stephen Brown and Martin Santa
BRATISLAVA/FRANKFURT, Oct 15 (Reuters) - The euro zone economy climbed out of recession in the third quarter, Italy and Slovakia's central banks said on Thursday, although there was a difference of opinion about the strength of the recovery.
European Central Bank President Jean-Claude Trichet stressed there should be no doubt about the bank's ability to reverse its current crisis-fighting measures when appropriate and labelled excessive swings in currency markets as an enemy.
With financial markets debating how soon signs of economic recovery may prompt the ECB to begin withdrawing stimulus for the economy, the Bank of Italy said in a quarterly bulletin it expected third-quarter growth in the zone to "turn positive, in the order of half a percentage point". [ID:nRON006855]
But ECB governing council member Ivan Sramko said at a conference in Bratislava that data pointed to a milder upswing.
"Industrial production and the consumer confidence index suggest a stabilisation of the economic development and confirm possible ... growth in the third quarter of 0.1 percent," Sramko, governor of the Slovak central bank, told a conference.
The ECB itself does not give detailed quarterly forecasts. Its latest full-year projection from September forecasts gross domestic product (GDP) to drop by 3.8 to 4.4 percent this year and a range for 2010 of -0.5 to +0.9 percent.
In an interview with Market News International, Yves Mersch, another ECB policy maker, agreed it was too early to commit to the removal of the ECB's support. [ID:nLF715595]
But he noted that some measures of inflation expectations had started to edge up and added that recent improvements in some economic data meant that the ECB's September staff forecast would probably be pushed up if calculations were re-run.
DOLLAR POLICY
Asked about the recent slide of the U.S. dollar Trichet said: "Excessive volatility is an enemy from the standpoint of stability and prosperity of the global economy."
Pressed on whether he thought U.S. policymakers were
actually pushing for a stronger dollar
Mersch said there was no reason to doubt U.S. intentions.
Currency dealers also said the euro extended the day's losses on Trichet's reiteration that the euro was not created to be a global reserve currency. [USD/]
Trichet also sent warnings to euro zone governments with spiralling debts and budget deficits.
"The debt and budget deficits of a number of euro area governments have reached worrying levels," he said.
The ECB has provided banks with unlimited liquidity injections since early in the crisis, slashed euro zone interest rates to a record low of 1 percent and has also embarked on a programme to buy 60 billion euros worth of covered bonds.
ECB heavyweight and head of Germany's Bundesbank Axel Weber added his voice, saying the massive monetary and financial stimulus that had been thrown at the financial crisis "cannot be strengthened." [ID: nFAB013278]
Trichet repeated his recent message that it was too early to declare the financial crisis over and also too early for the ECB to remove its support.
He repeated that current interest rates were "appropriate", and said that it was realistic for the 16-country to see a slow and steady recovery from recession. Mersch said ECB members were unanimous on rates at the moment.
A new Reuters poll revealed that economists expect the euro zone to have hauled itself out of recession in the third quarter, predicting a 0.4 percent jump in GDP, although they also see growth only creeping along for over a year. [ECILT/EU]
Trichet remained distinctly cautious.
"We have halted the freefall in economic activity that we witnessed around the turn of the year. There are reasons to believe that a gradual recovery lies ahead. But the uncertainty surrounding this outlook remains high," he said. (To see highlights of Trichet's comments please click [ID:nLF587849]) (Reporting by Stephen Brown in Rome, Martin Santa in Bratislava, and Sakari Suoninen and Marc Jones in Frankfurt; Editing by Toby Chopra and Patrick Graham)