UPDATE 1-Swiss economy grew much faster than thought in Q1

* Swiss revise Q1 GDP growth up to 1.0 pct Q/Q

* Analysts see further strong growth in Q2

* Employment rises in Q2, to underpin consumer spending

(adds details, analyst, franc, employment, background)

By Sven Egenter

ZURICH, Aug 26 (Reuters) - Switzerland's economy grew at twice the pace so far reported in the first three months of this year, highlighting the health of the country's recovery and raising the prospect of higher interest rates going forward.

Real gross domestic product (GDP) grew by 1.0 percent on the quarter, Bruno Parnisari, economist at the State Secretariat for Economic Affairs (SECO), said. In June, the government had reported quarterly growth of just 0.4 percent.

The year-on-year growth rate was revised up to 2.3 percent from 2.2 percent.

The Swiss franc pared earlier losses against the euro after the revision, moving back towards its recent record high, as the numbers reconfirmed views that the Swiss National Bank may hike interest rates before the European Central Bank.EURCHF=

"We would not have expected such a strong revision," Credit Suisse analyst Fabian Heller said. "The second quarter will also be strong, we have had good numbers from consumption and exports."

Data for the second quarter are due next Thursday.ECONCH

The Swiss economy has emerged less bruised than many other European countries from the global economic crisis thanks to the resilience of its consumers and surveys point to an ongoing recovery.

The 0.6 percent year-on-year rise in employment in the second quarter was also likely to underpin consumer spending going forward.[ID:nZAT010968]

The Federal Statistics Office said its indicator for the employment outlook pointed to further job growth, even in the manufacturing industry, which still shed jobs in the second quarter.

HIGHER RATES

Despite the strong data, economists said that the brisk pace of recovery was unlikely to continue. "We are still optimistic for the second half," Credit Suisse analyst Heller said. "Growth will, however, slow."

SNB chairman Philipp Hildebrand also warned in two recent interviews that risks for the Alpine economy had increased due to signs of a slowdown in the United States. Markets have taken his comments as a sign that the SNB would hold its target for the 3-month franc LIBOR unchanged at 0.25 percent at its Sept. 16 meeting.

But UBS analyst Reto Huenerwadel said the upwardly revised growth numbers supported the bank's view that an interest rate increase was possible in three weeks.

Economists said the SNB's growth forecast of around 2 percent for the full-year now looked rather cautious. Huenerwadel said he had a forecast of 2.5 percent for the full-year.

The overall revision of GDP data showed that the Swiss economy shrank by 1.9 percent in 2009, a slightly steeper decline than so far reported.

(Reporting by Sven Egenter; Editing by Toby Chopra)