The International Monetary Fund will raise its 2010 growth forecast for the world economy to 3.1 percent from 2.5 percent to reflect improving economic conditions, a newspaper reported on Wednesday.

Citing unidentified sources at the IMF and the German government, German business daily Handelsblatt said the IMF had revised its global forecast for this year to a 1.1 percent contraction from a negative 1.4 percent before.

The data is pointing upwards on a weekly basis, it quoted one of the sources as saying. The IMF is due to update its forecasts in its World Economic Outlook to be released in Istanbul on Thursday.

The Handelsblatt also said the IMF had raised its forecasts for Germany's gross domestic product to grow by 0.3 percent next year after previously predicting a 0.6 percent contraction.

Output in Europe's biggest economy would shrink by 5.3 percent this year, less severely than the IMF's previous forecast of a 6.2 percent decline, the newspaper said.

(Reporting by Jan Dahinten; Editing by Kim Coghill)