European businesses are concerned by the euro's strength but see state protectionism and poor coordination of global economic policies as a greater threat, Europe's top employers' group said on Monday. Earlier this month the euro hit its highest level against the dollar since January on market expectations the U.S. central bank would begin another round of quantitative easing -- printing money to buy bonds in the hope of spurring growth.

The rise was a concern for exporters in the European Union, but signs that the EU's economic recovery remains largely export-driven have mitigated some of the impact, according to BusinessEurope, a group representing 20 million companies.

At the same time, European businesses are increasingly concerned about the inability of the world's leading nations to address economic imbalances, BusinessEurope said.

"The need to uphold global trade, fight protectionism and implement competitiveness-enhancing reforms in Europe is viewed as of the highest priority by the business community," BusinessEurope said in a statement.

At a meeting in Seoul last week, G20 leaders agreed to a watered-down commitment to watch out for dangerous imbalances.

They promised to move towards market-determined exchange rates and shun competitive devaluations, addressing concerns about China's tightly managed yuan and a U.S. monetary policy that some economists say is aimed at keeping the dollar down.

BusinessEurope said European companies were worried about the impact of the Federal Reserve's policies on the euro.

"The euro is perhaps the only currency (trading) according to market rates," the group's Director General Philippe de Buck told reporters.

The group expects the euro zone economy to grow by 1.6 percent this year and 1.4 percent in 2011, while the EU as a whole should grow 1.8 percent and 1.7 percent. Germany is seen growing by 2 percent next year and 3.5 percent in 2010.

In June, BusinessEurope had forecast the European economy to expand by 1.1 percent this year, lower than the new forecast.

It expects unemployment rates to remain unchanged next year in the single currency area at 10 percent, even though it expects some 600,000 jobs to be created in 2011.

Inflation in the euro area is expected to nudge up to 1.6 percent in 2011 from 1.5 percent this year.

The major risks to growth forecasts, in addition to protectionist policies, stem from access to raw materials, commodity prices, insufficient public finance reforms and potential tax increases, the group said. (Reuters)