* Global imbalances emerge, U.S. running out of steam - Rehn
* Says G20 must coordinate policy to rebalance world economy
By Daniel Flynn
LUXEMBOURG, Oct 19 The European Union's monetary
affairs chief called on G20 governments on Tuesday to take
coordinated steps to rebalance world economic growth, ahead of
their talks this week in South Korea.
EU Economic and Monetary Affairs Commissioner Olli Rehn said
imbalances that destabilised the world economy before the 2008-
2009 financial crisis were emerging again, with exporting
nations running excessive trade surpluses while others racked up
Rehn said economic recovery in the United States, where
jobless rates have remained stubbornly high and consumers
cautious about spending, "appears to be running out of steam".
While unemployment had fallen in most of Europe, a rebound in
the region's economy was still "in progress", he said.
"In the world economy...the pre-crisis imbalances are
emerging, which threaten sustained recovery and job-creation,"
Rehn told a news conference after talks between European finance
ministers in Luxembourg.
"It's essential that the G20...will be able to restore a
sense of unity and especially pursue effective international
policy coordination to rebalance global growth," he said.
The Commissioner will travel to South Korea this week for
Oct. 22-23 talks between G20 finance ministers expected to focus
on reform of the IMF, new rules for international banking
regulation and global currencies.
In recent weeks, the EU has closed ranks with Washington in
accusing China -- set to become the world's second largest
economy this year -- of keeping the yuan CNY= low to boost
exports, undermining jobs and growth in Western economies.
ALL COUNTRIES MUST DO MORE
With the euro topping $1.40 in recent days, its highest
level since January, European officials have increasingly
expressed concern that the currency could act as a counterweight
in a tug-of-war between the yuan and the dollar.
However, China's central bank jolted markets on Tuesday with
a surprise first rise in interest rates in nearly three years,
upping benchmark rates by 25 basis points, reflecting its
concern about rising asset prices and inflation. [ID:nSGE69I0HU]
Analysts said the move might suggest a deal between
Washington and Beijing on easing exchange tensions after
Treasury Secretary Timothy Geithner vowed the United States
would not devalue the dollar for its own advantage.
Washington has also delayed a decision on whether to label
China a currency manipulator until after a summit of G20 leaders
in November in Seoul.
Rehn, who has repeatedly called for China to revalue the
yuan more quickly, struck a measured tone on Tuesday.
"All countries should do their part to rebalance global
growth. The surplus countries by reinforcing domestic demand and
the deficit countries by prioritising...export growth," he said.
The United States would like to see the G20 serve as a more
open forum for discussion of global currencies -- an aim shared
by France, which takes over the presidency of the group after
the November heads of state and government meeting.
French Economy Minister Christine Lagarde said G20 issues
were not discussed in depth on Tuesday.
European ministers, however, expressed satisfaction they
clinched a hard-fought deal on hedge fund regulation ahead of
the G20 talks this week, allowing them to present a united
(Additional reporting by Annika Breidthardt and Jan
Strupczewski, editing by Rex Merrifield)