A delegation led by Eurogroup chief Jean-Claude Juncker, European Central Bank head Jean-Claude Trichet and economic and monetary affairs commissioner Joaquin Almunia also urged a "gradual and orderly" appreciation of the yuan.

It also warned China to be careful with its exports -- often much cheaper than those of other countries -- to avoid provoking a protectionist backlash, in the talks held in the eastern city of Nanjing.

"We are considering the moment has not yet arrived to withdraw the stimulus packages that are under way in various parts of world," Juncker told a news briefing after the meeting between EU officials and Chinese economic managers.

The Asian giant's economic recovery was well under way, Juncker said, adding the Euro area was also detecting clear signs of improvement and expecting to see a moderate recovery in 2010.

"The Euro area will see no major withdrawal of stimulus measures in 2010," he said.

The meeting took place a day ahead of a major China-EU summit expected to focus on climate change.

The yuan's exchange rate is one of the thorniest issues between China and the European Union.

The Chinese currency has been effectively pegged to the US dollar since the summer of 2008, and Europe fears the euro's resultant rise against the yuan will hurt EU exports to China and slow the continent's economic recovery.

"We said there was a case for what I would say is a gradual and orderly appreciation of the currency against the euro and the major floating currencies. This was our message," Trichet told reporters.

"We were not defending the overall interest of the European economy only," he said. "We were defending what we trust is the superior interest of both the Chinese and the European economy -- and the global economy."

Trichet said the rebalancing of China's export-dependent economy was "part of its own stability and prosperity."

However, the European officials said they were not optimistic that Beijing's policy on the yuan would change.

Almunia confirmed the low value of the yuan against the euro had "led to a situation with which we are not satisfied."

Protectionism was a concern for both sides, he added, pointing out the EU was China's largest trading partner, accounting for a fifth of the Asian giant's total exports.

"In this still difficult economic situation we should avoid protectionism... it is in the Chinese interests not to create conditions that can lead to protectionism," he told reporters after the news conference.

Wen, for his part, also voiced his opposition to trade and investment protectionism, according to comments broadcast on state television. He also defended the yuan.

"China maintains the stability of the yuan exchange rate and has made important contributions to global financial stability and economic development," he was quoted as saying.

Wen added China would gradually increase the "flexibility of the yuan exchange rate."

Earlier this month US President Barack Obama appeared to have failed to persuade Chinese officials to loosen the yuan's peg to the dollar.

"The Chinese are telling us exactly the same thing they are telling President Obama," European Commission president Jose Manuel Barroso told reporters after a dinner with Wen before Monday's China-EU summit.

A week before the United Nations Climate Change Conference begins on December 7, environmental concerns are expected to overshadow other issues at the summit, which is also being attended by Swedish Prime Minister Fredrik Reinfeldt, who holds the rotating EU presidency.

"I certainly asked the Chinese and all our partners to explore the outer limits of their position," Barroso said after the dinner. "What is at stake is very important: it's the future of our planet."

China meanwhile is expected to offer reassuring words on the importance of the EU after Obama's recent visit here fuelled talk of a "G2" world dominated by Washington and Beijing.

One senior European official, who spoke on condition of anonymity, said the Nanjing meeting marked the first "substantial summit we have had since 2007".

China cancelled a December 2008 summit in protest at a meeting between the exiled Tibetan spiritual leader, the Dalai Lama, and French President Nicolas Sarkozy, who held the EU presidency at the time.

A summit between the two sides was subsequently held in Prague in May this year.

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