Risks to Europe's growth have increased, but even a threat of war in Iraq did not justify relaxing budget discipline, European Monetary Affairs Commissioner Mr Pedro Solbes has said.

He added that some of the risks mentioned by the European Commission in its November economic forecasts had already surfaced, such as a rise in oil prices and worsened growth prospects for Germany, Europe's biggest economy.

But he said it was too early for any revisions to forecasts that predicted the 12-nation euro zone would grow by 1.8 per cent this year.

"The likelihood that risks [to growth\] will materialise is higher today than it was in November. But it's too early to quantify that," he said, speaking after an economic conference in Athens on the euro and the Mediterranean region.

He said a rise in oil prices to $33-$34 a barrel was of concern to Europe's economies as it was estimated that a 10 per cent increase in the price of oil would cut about 0.2 percentage points off the region's growth rate.

Mr Solbes also flatly rejected loosening the restraints of the EU's Stability and Growth Pact in a bid to cushion the impact on growth from a possible war in Iraq.

"I don't see any reason for the relaxation of the stability pact," he said after meeting Ecofin chairman Mr Nikos Christodoulakis in Athens.

"I didn't see it in the past and don't see it now," he said when asked whether there were plans to relax budget discipline to offset a possible economic fallout if there was a war in Iraq.

Mr Solbes rejected calls for a US-style economic stimulus package, saying such measures in Europe would boost the overall level of budget deficits to 6 per cent of GDP - twice the Stability and Growth Pact's limit.

He brushed aside questions about any other economic measures that the EU could take in the case of war.

Meanwhile, oil prices fell yesterday on news of an end to a general strike in Venezuela that has crippled the country's oil exports, although opposition leaders said a walkout in the oil sector would continue.

The price of reference Brent North Sea crude oil for March delivery dropped to $30.69 per barrel in late trading here from $31.10 at the close of the previous session.