The world economic recovery is strong and risks that it could be derailed are fading, top central bankers said yesterday.

Central bankers from the group of 10 (G10) leading industrial nations and their counterparts from top emerging economies were optimistic the downturn which followed a prolonged stock market slump was over, despite a weak US jobs report last week.

"The sense of the meeting today was that the sustainability of the recovery at the global level was certainly not to be put in question," said European Central Bank (ECB) president Mr Jean-Claude Trichet, who is spokesman for the G10 central bankers.

"We have a strong recovery," he told a news conference in comments that reinforced upbeat messages from other international agencies.

His remarks at the central bankers' meeting in the Swiss city of Basel helped to allay fears that the weak US labour market was a sign that America's recovery is more fragile than thought.

Last week the International Monetary Fund said there were potential "upside surprises" in the global economy. The Organisation for Economic Cooperation and Development was also optimistic.

Asian central bankers were likewise upbeat. Arriving for the meeting, Bank of Japan governor Mr Toshihiko Fukui said his country's economy was improving moderately, despite the continued risk of deflation.

China expects its economy to grow in the 7-8 per cent range this year, said Li Ruogu, the deputy governor of China's central bank.

Mr Trichet warned, however, that global investors were taking on a lot of risk and that the central bank leaders would be watching developments closely.

"We consider that it is true that the risk appetite of global investors is at a level that is significant in historical terms," he said. "We have to observe this evolution and to be vigilant, but we are not alarmed."

Mr Trichet's comments echo those on Sunday by the Bank for International Settlements (BIS), a forum for the world's central banks and host of the G10 meeting.

It warned that investors were extending themselves in a search for high returns more than economic fundamentals might merit and this had driven a global equity rally in 2004.

Share prices have outpaced company earnings improvements for about a year, pushing some valuations beyond historical averages, said the BIS, whose views are seen as reflecting a consensus among monetary authorities.