Snow set to feel heat in Europe

US Treasury Secretary John Snow is this week set to defend the America's mixed economic record on what could be a heated tour of European capitals, including a keynote address in London on Wednesday.

Snow's trip, which began in Dublin yesterday, comes amid heightened concern in Europe about the recent slump of the dollar to record lows against the euro, and the bulging US budget and trade deficits.

A Federal Reserve policymaker described the global economic situation as 'pretty unstable'. But ahead of the tour Snow signalled that he intends to deflect criticism by targeting-what US officials believe is the need for more structural reform in Europe.

'They've got to embrace the spirit of enterprise,' said Snow, adding that European taxes should be cut.

Federal Reserve Governor Edward Gramlich said funding the deficit required influxes of foreign capital, mostly from China and Japan.

'If they begin to have inflation in their own countries, they are probably going to have to stop (buying US debt),' Gramlich said. 'So we have a pretty unstable world situation.'

The dollar last week breached $1.30 to the euro for the first time.