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European Central Bank (ECB) president Mario Draghi has said there are some tentative signs of an economic recovery in the eurozone.

He said there may be "gradual recovery in economic activity in the remaining part of the year and in 2014".

It comes as the ECB once again kept interest rates at a historic low level of 0.5%.

And Mr Draghi has again said rates will remain at low levels for the foreseeable future.

"The Governing Council confirms that it expects the key ECB rates to remain at present or lower levels for an extended period of time," he said.

His statement that rates would stay low is aimed at reassuring markets that the ECB is not ready to follow the US Federal Reserve towards withdrawing or "tapering" emergency stimulus.

The rate decision comes after some positive indicators this week, including a slight drop earlier in the number of people unemployed in the eurozone.

It was the first fall for some 25 months, although the jobless rate remains at 12.1%.

And on Friday, it was revealed that eurozone manufacturing activity grew for the first time in two years in July as factory output increased.

Markit's Eurozone Manufacturing PMI rose to 50.3, from June's 48.8, breaching the 50 threshold for growth for the first time since July 2011.

Inflation in the currency bloc remains steady at 1.6%, below the ECB's goal of 2%.

Mr Mr Draghi said there were still some challenges ahead, as he warned that eurozone countries should not end efforts to reduce government budget deficits.

"The risks surrounding the economic outlook for the euro area continue to be on the downside," he said. "Recent developments in global and financial market conditions and the related uncertainties may have the potential to negatively affect economic conditions.

"Other downside risks include the possibility of weaker-than-expected domestic and global demand and insufficient implementation of structural reforms in euro area countries."

The euro dropped to an intra-day low of $1.3196 after his remarks before moving to $1.3217, down 0.6% on the day.