IMF chief Dominique Strauss-Kahn said yesterday "there's no threat to the euro system" despite a sharp fall in global stocks and a race to the safe-haven dollar.

He acknowledged, however, that the financial markets were shaky "because of the Greek programme, because of the lack of confidence in the situation in the eurozone and so on".

The International Monetary Fund president was speaking as stock markets around the globe extended heavy losses on fears the European debt crisis could cause a double-dip recession.

Uncertainty was sharpened by dangerous tensions between North and South Korea.

The European crisis stemmed from Greece's heavily indebted economy, and from turmoil in the Spanish banking sector suggesting that the euro's woes could spread to other weak eurozone members.

Investors were fleeing the euro for the relative safety of the dollar.

Asked by reporters whether the eurozone risked a domino effect from Greece putting the euro in peril, Mr Strauss-Kahn said: "I think there's no threat to the euro system. It's difficult for the Greeks to do what they have to do, but they have already taken bold decisions and from this point of view, everybody I think is commending the Greek government."

He added that he did not underestimate the fiscal burden now being put on "the shoulders of the Greeks" as their government tries to right its economy on the basis of a plan drawn up by EU states and the IMF. "I think that this plan will work. The problem of course is the question of implementation now," Mr Strauss-Kahn told reporters.

During the preceding debate, organised by the Brazilian television network Globo News, the IMF chief said the world generally was seeing a recovery, even if Europe and the United States were still suffering the effects of the 2008-2009 financial crisis.

"Almost all countries in Asia are out of the crisis," and several South American nations -notably Brazil, Chile and Peru - were also doing "very, very well," he said.