Europe’s economic leadership sounded renewed warnings yesterday over the euro’s relentless rise against the embattled dollar, in the latest sign of mounting eurozone angst over the single currency’s now sky-high valuation.

Joaquin Almunia, the EU’s economic affairs commissioner, gave warning that the world economy was in a “precarious balance”, and suggested that the risks of a runaway collapse in the dollar as part of a disorderly unwinding of global economic imbalances had risen markedly.

Mr Almunia, in a speech in Brussels, also voiced European concern that the euro was bearing the impact of the dollar’s steep losses virtually alone, as key Asian economies such as China maintained their controversial currency pegs to the dollar.

“Action is lacking at a time when it is most urgently needed,” he said. “In today's climate of volatile financial markets and slowing global growth, all partners must make a concerted effort. We should not wait until financial markets force global adjustment.”

Cautioning that “the risks of a disorderly unwinding have increased since last August”, the commissioner protested that progress by the world’s main economic blocs to tackle global imbalances as they pledged a year ago had been too slow.

He added: “Ultimately, the marked appreciation of the euro against the dollar, the Japanese yen and the Chinese yuan does not fully reflect macroeconomic realities, and one currency should not be bearing the brunt of global adjustment alone.”

The comments came as Jean-Claude Trichet, President of the European Central Bank also reiterated his own recent warnings to markets over growing eurozone unease with the euro’s record levels.

Speaking in his ECB capacity after chairing a bi-monthly meeting of the world’s top central bank governors in Basle, Mr Trichet once more emphasised the ECB’s concern over “excessive exchange rate moves”. Repeating his standard mantra on the euro’s value, he added: “Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth.”

He again sought to dampen upward pressure on the euro by pointing to the insistence of President Bush and Henry Paulson, the US Treasury Secretary, that they continue to favour a “strong dollar” policy. Few in the currency markets place much weight on those statements, however.

The latest symptoms of eurozone unrest over the dollar’s decline came after its latest losses on Friday pushed the euro to another record of almost $1.5460. Yesterday, the comments from Mr Trichet and Mr Almunia seemed to have allowed the single currency to steady a little and it ended the day little changed.

Fears over the toll from the euro’s rise in the 15-nation eurozone were eased, however, by official figures showing that German exports rose in January at their fastest pace for 16 months, while France and Italy reported stronger than expected industrial output in the month.

Amid mounting fears of US recession after figures on Friday showed that American employers cut 63,000 jobs last month, in the steepest drop in US employment for five years, Mr Trichet also sought to talk up sentiment on world prospects.

“There is an ongoing growth, with a certain level of slowing down,” he told reporters after the talks among the G10 group of central bank governors. Emerging markets are showing particular resilience, he noted.

But amid signs of renewed strains in eurozone and US money markets he emphasised that the Federal Reserve, ECB, Bank of England and other central banks remained watchful and ready to act.

“At a global level, the alertness of central banks was very important, as always,” he said. “We are in close contact.”

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