EUROPEAN UNION U.S. urged to curb deficits

The rising euro and slowing growth worry European finance ministers.
BRUSSELS, Belgium (AP) -- European Union officials urged the United States on Monday to curb its deficits to help bolster the sagging dollar amid fears a strengthening euro would stifle Europe's fledgling economic recovery.
"Now it's up to the Americans to respond," French Finance Minister Nicolas Sarkozy told reporters after a meeting of finance ministers from the 12 euro-using countries.
Dutch Finance Minister Gerrit Zalm, who chaired the session, agreed and stressed that there was no push for intervention in currency markets by the European Central Bank.
"The recent sharp movements of exchange rates are unwelcome," he said at the closing news conference, but added: "We didn't ask the ECB for anything."
That stance was echoed by U.S. Treasury Secretary John Snow at the start of his European tour Monday in Ireland.
Snow said that while the United States supports a strong dollar, exchange rates should be left to currency markets, suggesting that Washington would not support any intervention by central banks.
Other items on the two-day agenda for EU ministers included high oil prices, the revelation that Greece joined the euro zone using faulty budget data -- in fact, it didn't qualify at all -- as well as a counterterrorism push for common rules on cash movements into the European Union.
Threatens growth
The euro hit an all-time high above $1.30 last week -- a surge that, if it continues, threatens to stifle Europe's export-driven growth by pricing European products out of global markets.
"It's not good for anyone to have this kind of movement," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said going into the evening meeting.
He welcomed Snow's reiteration of U.S. support for a strong dollar but said he was waiting to see what action is taken in Washington to back it up.
"If the imbalances of the U.S. economy are not adjusted in the future, the decision in the market will be as in the past weeks," Almunia said.
Currency traders blame the dollar's chronic slide on expanding budget deficits under President Bush as well as huge trade deficits. Despite Washington's official position, analysts say a weaker dollar would help correct those imbalances by boosting U.S. exports, thus spurring American economic growth.
Sluggish third quarter
The euro's rise comes on top of last week's data showing that growth in the euro-zone economy slowed sharply in the third quarter -- especially in heavyweights Germany and France -- and is expected to remain sluggish in the next six months.
"Policy makers cannot ignore the weakness of euro-area economies anymore," Morgan Stanley economists Eric Chaney and Anna Grimaldi wrote Monday, predicting that ministers would be "more vocal" about the euro's slide.
Ministers also examined the budget situation in 10 countries facing excessive red ink, although again no decisions were expected.