Policy-makers say worst may be past

The IMF is expected to release a report on Monday saying the euro zone does not need new stimulus measures, a euro zone source said.

Russian President Dmitry Medvedev told a conference in St Petersburg that the global economy had avoided the "worst-case scenario" but added: "It is too early to crack open the champagne.

Washington will be in focus next week, when the Federal Reserve names the first batch of big banks given the green light to repay funds from the $700 billion Troubled Asset Relief Program.

BRITISH PM FIGHTS FOR SURVIVAL

In Britain, ranked by the World Bank as the world's fifth-biggest economy by gross domestic product in 2007, its latest available figures, Prime Minister Gordon Brown reshuffled his government to stave off calls for an early general election.

Sterling fell against the euro and the dollar, although it recovered slightly on news that Britain's finance minister, Alistair Darling, would keep his job.

"The market is waking up to what a mess politics are in the UK," RBC currency strategist Adam Cole said in London.

Worries about Eastern Europe were fanned by calls from Polish and Swedish officials for swift action to help Latvia to prevent its economic crisis from spilling over into other countries in Europe.

The Baltic state, facing an economic contraction of up to 20 percent this year, is struggling to avoid a currency devaluation that would hammer exposed Swedish banks and reignite worries over Eastern Europe's prospects.

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