Global leaders and businessmen urged Europe on Monday to take fresh steps to resolve

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its deepening debt crisis, with a top executive of the IMF warning the continent will see a "downward spiral of collapsing confidence" if no further action is taken.

The comments came just days after Standard & Poor's downgraded the credit ratings of nine euro-zone countries, a move which rattled global stock markets on Monday on fears that the currency bloc could shatter, triggering a global recession.

"Without ... action, Europe will be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs," David Lipton, first deputy managing director at the International Monetary Fund, told the Fifth Asian Financial Forum in Hong Kong on Monday.

But "with decisive measures in Europe and global support for Europe, it is possible to avoid a new phase of the crisis," he added.

Lipton urged countries in which inflation has eased to halt monetary tightening to bolster global economic growth, and said Asia should play a bigger role in the IMF.

In another ominous setback at the weekend, negotiations on a debt swap by private creditors seen as crucial to avert a Greek default broke up without agreement in Athens, although officials said more talks are likely this week.

If Greece cannot persuade banks and insurers to accept voluntary losses on their bond holdings, a second international rescue package for the euro zone's most heavily indebted state will unravel, raising the prospect of bankruptcy in late March, when it has to redeem 14.4 billion euros in maturing debt.

In the event of further deterioration in the European crisis, no country or region would be immune, Lipton said, adding that Asia had a huge interest in seeing the problems in Europe resolved.

Speaking earlier at the forum, Britain's finance minister George Osborne applauded the progress made by the euro area, although he too said further action was needed.

"The euro zone has made progress in recent months, in particular the provision of liquidity to banks by the ECB," Osborne said.

"But of course there remains more to do, as the euro area itself acknowledges."

HSBC Chairman Douglas Flint also highlighted the need for swift action.

"There has to be market acceptance, market recognition that there is a mechanism to enforce or instill fiscal discipline," he said at the forum.