BRUSSELS (AFP) - Finance ministers from the 12-nation eurozone are to meet for talks clouded by the euro's record surge against the US dollar, which is adding to high oil prices in threatening Europe's fragile recovery.
Some sources suggest they could issue a declaration aimed at curbing the euro's rise, which saw it surge above the symbolic 1.30 dollar mark last week, although they may hold off on such a statement.
"Several ministers are concerned about the very high level of the single currency and the situation on exchange markets, in particular the Asian dimension," said one EU source.
Ministers are gathering amid signs that the appreciation of the euro is starting to eat into growth, already threatened by surging world oil prices in recent months.
Provisional figures from EU statistics office Eurostat Friday showed eurozone GDP was up a mere 0.3 percent in the third quarter from the second quarter.
Italy's Domenico Siniscalco last week claimed that "a coordinated intervention is being talked about again," while his boss Silvio Berlusconi warned that eurozone growth "won't get any better unless there is a supranational intervention that alters the euro's value".
Equally, German economics minister Wolfgang Clement has called on the ECB "to do its part to calm the situation".
For all the mounting political pressure for ECB intervention, EU sources were wary of predicting the outcome of Monday's talks.
"What is possible... is that there will be a declaration on the euro," one source said.
The Asian angle on the euro's rise against the dollar is also causing concern in Europe.
EU monetary affairs commissioner Joaquin Almunia warned last week that the undervaluation of China's currency -- which is pegged to the greenback -- was an economic headache for Europe.
"The fixed exchange rate between the US dollar and the renminbi (yuan) is creating problems... We have to remind some Asian countries that they have to create more flexible exchange rates," the Spanish commissioner said.
Foreign critics have long argued that the yuan's decade-old peg to the dollar has now left the Chinese currency seriously undervalued, giving Chinese exporters an unfair advantage in global markets.
The European Commission has said it and EU member states share European Central Bank president Jean-Claude Trichet's concerns over the "brutal" rise of the currency.
"Excess volatility and disorderly movements in exchange rates are undesirable for economic growth," spokesman Gerassimos Thomas said.
On Tuesday the eurozone ministers will be joined by their counterparts from the rest of the 25-member EU.
Agenda items will include the decisions on structural reforms taken at a November 5 summit, plans to reform the budget rules underpinning the euro, and Greece's massive deficit overrun.
At the summit, leaders endorsed a report by former Dutch prime minister Wim Kok calling for swifter implementation of the so-called Lisbon reform program, ambitiously aimed at making Europe the worlds most dynamic economy by 2010.
The debate on budget rules -- enshrined in the EU's Stability and Growth Pact -- will centre on the commission's proposed reforms to introduce budgetary flexibility at times of economic downturn.
And on Greece, ministers will discuss the reasons behind the massive revisions to its official figures, postponing any decision on disciplinary action until December, sources said.
11/14/2004 - 05:06 GMT - AFP