US treasury secretary Timothy Geithner today said it was important that debt-stricken European nations avoid moving too sharply with immediate budget cuts and tax hikes, since that could undermine growth and chances for reform.

"It's very important to get that balance right between ... growth and austerity," Mr Geithner told an event at the Brookings Institution in Washington DC.

"The best way to do that is ... with some gradually phased in medium-term plans for reform."

"To try to do it all up front, the risk is ... you're undermining the prospects for some stability in growth, some recovery in growth, and you may end up undermining and setting back the cause of reform," he added.

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