Brussels  - European Union leaders Thursday rejected calls by the administration of US President Barack Obama to increase the size of their 400-billion-euro (540-billion-dollar) economic recovery plan as part of international efforts to avert a global recession.

"We heard expressions from (EU leaders) like, 'We don't wish to be dictated to by the US or by those who want more fiscal stimulus'," said Czech Prime Minister Mirek Topolanek after an EU summit in Brussels.

"Various measures are being implemented. We don't yet know how effective these measures are going to be," said Topolanek, who chaired the talks as the current holder of the EU's rotating presidency.

The meeting in Brussels was designed to forge a common view among all 27 EU member states ahead of a G20 summit in London on April 2, which will be called upon to change the rules of international finance.

It came amid dire new forecasts from the International Monetary Fund (IMF), which now expects the global economy to contract by up to 1 per cent in 2009.

The IMF expects a much deeper recession in the 16-member eurozone, with its gross domestic product (GDP) set to shrink by 3.2 per cent this year, compared to a drop of 2.6 per cent in the United States.

The EU's economic recovery package is currently worth 3.3 per cent of the bloc's annual GDP, spread over two years. About half this amount is made up of so-called "automatic stabilizers" - non- discretionary public spending, such as for unemployment benefits, that naturally increases during a downturn.

The package has been described as insufficient by Obama's chief economic advisor, Lawrence Summers, and most recently by US economist and Nobel laureate Paul Krugman.

But their criticisms were rejected by EU leaders.

"All member states have adopted important stimulus programmes," said German Chancellor Angela Merkel.

"We are getting to a point in which Europe is doing everything it can," said Swedish Prime Minister Fredrik Reinfeldt.

While expressing deep concern over the state of the global economy, Reinfeldt said the large budget deficits of many EU member states meant there were "no easy solutions".

The meeting in Brussels came as millions of French workers held a second national strike in as many months, and amid growing social unrest in Latvia and other European nations that have been badly affected by the recession.

Jose Manuel Barroso, head of the EU's executive arm in Brussels, said the EU's "absolute priority" should be to "keep people in jobs."

Officials in Brussels expect at least 6 million additional jobs to be lost in Europe by 2010, raising the unemployment rate to 10 per cent.

The main concrete result of the first day of the two-day meeting in Brussels was an agreement to use 5 billion euros in community funds to finance energy security and other projects designed to stimulate the economy.

The agreement, reached after months of haggling, was clinched after Germany received assurances that the money would have to be spent by the end of 2010.

"I think we have reached a compromise that everyone can subscribe to," Topolanek said, with Barroso noting that entire EU would benefit from the implementation of these investments.

A compromise text tabled by the Czech presidency earmarks a total of 2.3 billion euros for gas and electricity infrastructure projects.

Some 505 million euros are to be spent on offshore wind energy projects, 1.2 billion for carbon capture and storage programmes, and a further 1 billion for the spread of broadband internet in rural areas.

On Friday, EU leaders were expected to also agree on the need to double to 50 billion euros the amount of funds that the European Commission can raise on the markets to bail out member states that run into financial trouble.

The debate has fuelled concerns that more EU countries may be running into balance of payments difficulties as a result of the global credit crunch.

The EU executive in Brussels has already provided funds to Latvia and Hungary, and is currently in talks with Romania.

On the G20 talks, Luxembourg Prime Minister Jean-Claude Juncker claimed a personal victory after receiving assurances from Merkel and French President Nicolas Sarkozy that no EU country would feature in a possible blacklist of a tax havens.

Austria, Luxembourg and Belgium had feared being singled out by fellow heads of state and government because of their countries' bank secrecy rules. (dpa)