updated 10/9/2007 7:51:14 AM ET 2007-10-09T11:51:14

Euro zone finance ministers called Monday on China to reduce its massive surplus and welcomed U.S. comments defending the dollar.

"In emerging economies with large and growing current account surpluses, especially China, it is desirable that effective exchange rates move so that necessary adjustments will occur," the 13 nations said in a joint statement read out by Luxembourg Prime Minister Jean-Claude Juncker.

"We have noted with great attention that a strong U.S. dollar is in the interest of the U.S. economy," he said, adding that ministers would continue to watch exchange rate markets closely.

Juncker did not join some ministers, such as Germany's Peer Steinbrueck, Austria's Wilhelm Molterer and Dutch colleague Wouter Bos in saying a strong euro reflected a strong European economy that could ride out problems.

Europe is starting to feel the bite as the U.S. dollar plummets, making French wine, Italian fashion and German cars expensive purchases for the EU's main export market in the U.S.

Last week, the employers' federation BusinessEurope said that, by crossing 1.40 against the US dollar, the euro exchange rate had reached a "pain threshold" for European companies.

Finance ministers from the United States, Japan, Canada, France, Germany, Britain and Italy meet for talks on the global economy on Oct. 19-22.

Outgoing International Monetary Fund Director Rodrigo Rato worded his concerns more strongly in a Financial Times interview on Monday, saying the U.S. dollar was undervalued and governments needed to keep an eye on global imbalances.

Since the currency's launch in 2002, the European Commission has urged the nations that use the euro to do more to coordinate their economic moves and cut spending.

It says the euro is already paying off because the euro zone has become more resilient to outside shocks, such as last year's oil price spikes.

But the possibilities of a worsening U.S. slowdown, higher oil prices and tighter borrowing conditions could all risk derailing Europe's first bloom of growth after several years of stagnation.

The EU executive has cut its forecast for the economy to grow this year from 2.6 percent to 2.5 percent after global financial turmoil sparked by mounting bad loans to U.S. homeowners.

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