UPDATE 1-Swiss government sees confidence returning to economy

* State secretaritiat SECO keeps 2013 growth view at 1.3 pct

* Ups 2014 growth forecast to 2.1 pct from 2.0 pct

* Cuts inflation forecasts for 2013 to 0.1 pct from 0.2 pct

* Risks still present despite revival of confidence

* SECO more upbeat than Swiss central bank

(Adds background, details)

ZURICH, March 18 (Reuters) - The Swiss economy is benefiting from signs of a recovery in the global economy and upbeat sentiment on global financial markets, the government said on Monday as it slightly upgraded its outlook for 2014 growth.

"The latest economic surveys indicate a more positive mood on a broad front over recent months," economists at the State Secretariat for Economics (SECO) said.

"In view of the continuing stability in the domestic economy and a brighter outlook for exports, the opportunities for a further increase in economic growth during the course of this and next year look good."

The SECO stuck to a forecast for 1.3 percent growth for 2013 and edged up its outlook for 2014 to 2.1 percent from the 2 percent it predicted in December.

It forecast consumer prices to rise by 0.1 percent this year, down from a prediction of 0.2 percent made in December, and confirmed a prediction for inflation of just 0.2 percent next year.

The upbeat tone of the government economists contrasts with caution expressed last week by the Swiss National Bank, which said the euro zone crisis could resurface, potentially driving investors back into the safe-haven franc.

The euro fell and European shares were set to open lower on Monday after Cyprus and international lenders agreed at the weekend that savers in the island's banking system would take a hit in return for the offer of 10 billion euros ($13 billion) in aid.

Cyprus's government was working early on Monday on a proposal to soften the blow of that levy, which broke with previous EU practice that depositors' savings are sacrosanct.

The SNB also stressed its determination to keep a lid on the franc at 1.20 per euro, a policy it introduced in September 2011 to prevent deflation and a recession after investors fleeing the euro zone crisis pushed the currency up sharply.

The SNB stuck to its forecast for Swiss growth of 1-1.5 percent in 2013, but trimmed its inflation forecasts, predicting prices will fall 0.2 percent in 2013 and rise 0.2 percent in 2014 and 0.7 percent in 2015.

The SECO said the recovery in Swiss exports will probably only be hesitant given continued weakness in European markets as well as the continued high value of the franc.

"The greatest potential threat however remains from the euro debt crisis which may have been stemmed but has still not been resolved," it said.

The SECO confirmed its forecast for Swiss unemployment to rise to 3.3 percent in 2013 from 2.9 percent in 2012.

The SECO's predictions are based on the assumption that Swiss interest rates will remain at rock bottom into 2013 and that the franc will fall 2 percent on a trade-weighted basis this year and a further 1.7 percent in 2014.

(Reporting by Emma Thomasson; Editing by John Stonestreet)

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Keywords: SWISS ECONOMY/FORECASTS