G20 must strengthen economic recovery: Obama

US President Barack Obama urged the world's leading economies Friday to avoid scaling back government spending too quickly or risk derailing the global recovery.

"We worked exceptionally hard to restore growth; we cannot falter or lose strength now," Obama said in a letter to G20 leaders ahead of a June 26-27 summit in Toronto.

"Our highest priority in Toronto must be to safeguard and strengthen the recovery," Obama said in the letter dated June 16, but released Friday amid concerns about the pace of the global recovery.

The warning -- a clear shot at European governments reining in budget deficits -- comes after months of worry about the health of the eurozone, fueled by huge public debts in Greece and Spain.

Germany, Europe's biggest economy, is working on a multibillion-euro package of spending cuts design to bolster government finances and recoup market confidence.

But those moves have led to US concerns that the global recovery -- from the worst slowdown in decades -- might be stopped in its tracks by withdrawing government stimulus.

Obama said the meeting of the Group of 20 would take place "at a time of renewed challenge to the global economy" as he laid out an action plan of issues he hoped the summit would tackle, including financial reforms.

"To support the recovery and strengthen the ability of our financial systems to deliver needed credit, we must maintain the momentum of financial repair."

He offered a checklist of items that should be embraced, including stricter capital requirements and derivatives oversight, increased transparency and disclosure and a mechanism for winding down global financial firms.

But he indicated a deal on financial reform would be unlikely to come before a further G20 summit in Seoul later this year.

"We want our negotiators to reach agreement on a new capital framework we can endorse in Seoul that will include higher common equity requirements, tighter definitions of capital, a simple mandatory leverage ratio, and appropriate liquidity requirements," Obama said.

While voicing opposition to short-term budget cuts, Obama also called for a longer-term commitment to "sustainable" public finances.

He also expressed concern about "weak private sector demand and continued heavy reliance on exports" by some nations within the G20.

As part of efforts to rebalance the global economy, China has been urged to wean itself away from dependence on exports to boost domestic consumption.

In apparent message to China over its allegedly undervalued currency, Obama said he wanted "to underscore that market-oriented exchange rates are essential to global economic vitality."

The G20 sought and won the role as an international forum for coordinating the response to the global economic meltdown, and Obama reminded the organization of its responsibilities.

"Together we designated the G20 as the premier forum for international economic cooperation," he wrote.

"It is important that the G20 demonstrates its continued determination to work collectively to address the renewed challenges facing the global economy."