Chancellor George Osborne said on Wednesday he discussed with Japanese officials how Britain and Japan can work with Group of 20 countries and the International Monetary Fund to deal with Europe's sovereign debt crisis.

Osborne, who spoke after separate meetings with Japan's prime minister and finance minister, did not give details of their discussions on the issue.

Financial markets are on edge as mass ratings downgrades in Europe and pressure on Greece to secure a deal with its creditors over reduced interest payments on its debt threaten to worsen Europe's sovereign debt crisis and harm the global economy.

We talked about the global economic situation and how Japan and Britain can work together through the G20 and the IMF in helping reduce the instability in the world, Osborne told reporters.

We talked specifically about the euro zone crisis and what we need to see from euro zone countries in dealing with that crisis.

Osborne is visiting China and Japan this week in a drive to attract Asian investment and to lessen Britain's dependence on trade with the crisis-hit euro zone.

He said he talked with the Japanese ministers about Iran's nuclear ambitions and they agreed Iran should not have nuclear weapons.

Osborne also agreed with his Japanese counterpart Jun Azumi to seek ways to provide more resources to the IMF, depending on Europe's own efforts, a Japanese finance ministry official said.

The ministers also shared concern about the potential negative impact of the U.S. Volcker Rule on the global economy and financial markets, the official said.

The U.S. could reinforce sanctions against Iran by using the Volcker rule, which limits banks' trading, against firms that fail to comply. Tokyo is worried it could make trading in Japanese government bonds less attractive and profitable.

The two sides did not discuss currency issues, the official said. Japan has intervened in the currency market to sell the yen so as to protect its exporters, a potential source of friction with other governments who do not approve of such action.

U.S. rating agency Standard & Poor's cut its credit rating of the euro zone's EFSF rescue fund on Monday, following a mass downgrades three days earlier to nine of the 17 euro zone members, saying policymakers have not done enough to curb the two-year old sovereign debt crisis. Britain is outside the euro zone and maintains its top credit rating.

Greece risks going bankrupt when 14.5 billion euros (12 billion pounds) of bond redemptions fall due in late March. Without a private-sector bond swap involving a voluntary writedown, a 130 billion euro second international bailout for Greece could fall apart.

(Additional reporting by Tetsushi Kajimoto; Editing by Joseph Radford and Michael Watson)