But there was disappointment for Turkey after the leaders decided it would have to wait at least two more years before it is invited to hold membership talks.

The new funding deal offers the 10 candidates about 1.5bn euros more than a previous package approved in October.

It now awaits approval by the candidates countries themselves.

Poland, the largest of the states seeking membership, has been holding out for an even more generous offer.

But earlier the Danish Prime Minister Anders Fogh Rasmussen warned them that there was no more money and if they refused the offer they could risk delaying membership until at least 2007.

Denmark will hold individual meetings shortly with the candidates which have not yet accepted terms of accession.

But most of the candidate countries signalled their willingness to accept the EU's entry conditions ahead of the summit and three of them - Cyprus, Estonia and Slovakia - have already wrapped up formal talks.

Poland is also expected to follow suit in the end.

FRAGILE SENTIMENT IMPROVES IN JAPAN

The clouds lifted slightly from Japan's struggling economic landscape, thanks to new figures showing business confidence was improving.

The quarterly Tankan survey issued by the Bank of Japan recorded a December diffusion index of minus 9, comfortably better than September's -14 and well ahead of expectations.

But the lull is likely to be short-lived, with the gains in manufacturing — where Japan's fabled export strength still holds sway — outweighed by persistent gloom among service industries.

The Tankan "confirms the 2002 story of strong export-led growth and no feed-through to domestic demand", said Jesper Koll, chief economist at Merrill Lynch.

Unless the export benefits do make it into the home market, the chances of stopping deflation throttling any potential recovery remain slim.

Japan's miraculous economic performance for most of the past half-century was built on a concerted drive for exports, and the experience gained is still paying off.

The record-breaking June Tankan demonstrated as much, as hopes for a strong turnaround in the US fed optimism among manufacturers.

But since then the US recovery has seemed to stutter.

Disappointing output growth helped catalyse the Federal Reserve's half-point interest rate cut in November.

The markets were also disappointed by the Bank of Japan's figures.

The benchmark Nikkei 225 index slid more than 2% to end Friday at a three-week low of 8,516 points.

And the yen, whose 7.6% gain this year against the dollar has been no help to the export trade, slipped 0.7 yen against the dollar to 122.58 yen.

WORLD ECONOMY STABLE, IMF SAYS

The world economy held firm over the summer, weathering a bevy of concerns from poor corporate profits to future terrorism, a new report has found.

However, investor sentiment continued to sour in the three months to the end of September because of big losses on global stock markets, the International Monetary Fund (IMF) said.

It is a trend that started with the burst in technology shares in March 2000.

"The cumulative impact of market declines in recent years has weakened balance sheets of financial institutions, corporation and households, increasing their vulnerability to further asset-price declines," said the IMF's quarterly Global Financial Stability Report.

SRI LANKA GETS $15M WORLD BANK LOAN

Sri Lanka has been granted a $15m (£9.5m) loan from the World Bank to help rebuild its economy after 19 years of civil war.

The loan is intended to help finance the government's new economic strategy

"Regaining Sri Lanka", after a peace agreement earlier this month.

Peter Harrold, the World Bank country director for Sri Lanka, said the Sri Lankan government was "opening the door to a better standard of living for the people of this country".

The World Bank said its loan would be used to provide specific support for transport, telecommunications, petrol, power and water supply.

JAPANESE EXPORT DRIVE CONTINUES

Japan's current account surplus shot up 23.5% in October, from a year earlier, spurred on by strong demand from Asia for electronic products.

The current account - the measure of trade in goods and services - rose to 936bn yen ($7.6bn), the Ministry of Finance said on Wednesday, in-line with analyst's forecasts.

Last month there was a 438% jump in Japan's trade surplus with the rest of Asia to 339.4bn yen.

The ministry said Japan's total exports in October rose 13.9% from a year earlier, led by semiconductors, electronics goods and motor vehicles.

The trade surplus jumped 71.1% year-on-year, but that was largely due to falls after last year's 11 September attacks on the US.

WORLD BANK WARNS ON GROWTH

The world economy will experience "sluggish" growth next year, hitting attempts to reduce poverty in developing countries, the World

Bank has warned in its latest global economic outlook.

The Bank said that the need to remove trade and investment barriers which disadvantage poorer countries was becoming increasingly urgent.

It noted that foreign direct investment flows had fallen at the sharpest rate since the global recession at the start of the 1980s.

The report also said that while privatisations often helped economic activity, they were "no panacea" unless effective competition was introduced.

The World Bank expects the global economy to grow by 2.5% next year.

NEW ECONOMICS CHIEF

Philippines President Gloria Macapagal Arroyo has chosen a new head of economic planning, less than 24 hours after demanding the resignation of the last man to hold the post.

The new secretary of economic planning and development is Romulo Neri, an economist currently in charge of the congressional planning and budget office.

BUSH NAMES NEW TOP ECONOMIC AIDE

US President George W Bush has appointed Stephen Friedman to co-ordinate White House economic policy.

"I selected Steve for his wide experience and steady and sound judgment," Mr Bush said at a White House ceremony.

"He understands the free-enterprise system. He knows how the economy works."

Mr Friedman's appointment follows days of speculation the nomination was in trouble.

NEW CENTRAL BANK GOVERNOR

Brazil's President-elect Luiz Inacio Lula da Silva - also known as Lula - has appointed a former investment banker as the new head of the country's central bank.

US RATE DECISION WAS UNANIMOUS

US central bankers all voted in favour of last month's interest rate cut.

The Federal Open Market Committee (FOMC) voted 12-0 in favour of a half a percentage point cut to 1.25% - a 41-year low.

"A relatively aggressive easing action could help to ensure that the current soft spot in the economy would prove to be temporary and enhance the odds of a robust rebound in economic activity next year," minutes of the FOMC's meeting on 6 November said.

But some FOMC members "voiced reservations" about a shift to a neutral stance on the economy accompanying the cut.

MALAWI'S NEW ECONOMIC PLEDGES

Malawi's government is under pressure to clean up its act, following the suspension of vital loans from the International Monetary Fund (IMF). The Malawi parliament has now unanimously passed a bill to borrow $50m (£31.6m) from the World Bank to cushion the country's worsening food crisis, while finance minister Friday Jumbe has introduced a series of cost-cutting measures.

FACTORIES 'AT RISK OF RECESSION'

UK manufacturers are teetering on the brink of their second recession in as many years, according to a survey.

A monthly poll from employers' lobby the CBI showed that 45% of factory owners believe output is below normal, with just 13% reporting an increase.

The net balance of minus 32% marks a deterioration from minus 22% in November.

The CBI said the figures reflected a decline in overseas orders amid sluggish economic growth abroad.

EU IMPROVES FARM DEAL BEFORE SUMMIT

The European Union has improved its offer on aid to farmers from candidate countries, the Polish Government said the other day.

A Polish Government spokesman, Michal Tober, said that under the new terms, farmers in the 10 prospective member-states would get half the level of subsidies currently enjoyed by EU farmers.

The decision came just hours before the start of an historic summit to agree the European Union's biggest ever expansion, with 10 applicant states under consideration.

As EU leaders gathered in the Danish capital Copenhagen for the summit, the High Representative for Foreign Policy, Javier Solana, said a solution to the thorny issue of the division of Cyprus was now also within grasp.

EUROPE'S SUPER ROCKET EXPLODES

Europe's new heavy-lift rocket has failed on its maiden flight.

The Ariane 5-ESCA blasted off from the Kourou spaceport in French Guiana at 1921 local time (2221 GMT) and exploded over the Atlantic three minutes later.

CHINA TO BE TOP EXPORTER TO JAPAN

For more than half a century the US has exported more to Japan than any other country.

But the long relationship, forged as a result of the postwar US occupation and subsequent security pact between the two countries, is under threat from China, new figures show.

The latest data indicates that rising machinery exports - partly from Japanese firms using cheaper Chinese labour - will help knock the US from its top spot.

And the shift is now sparking hostility in Japan, as some say China's intentionally weak currency is hurting not only Japan's competitiveness, but that of other countries too.

AUSTRALIA JOB BOOM CONTINUES

The drought gripping Australia may be blunting the country's boom, but it is having little effect on the jobs market, new figures suggest.

More than 60,000 new jobs were created in November, the government said, 95% of them full-time.

CHILE AGREES TRADE PACT WITH US

Chile and the United States have agreed a free trade pact after 11 years of talks, both countries have said.

Chile's President Ricardo Lagos said the trade deal would "mean more jobs, more work, more development, more growth" for the South American country.

INTERNET SHOPPING SET FOR NEW RECORD

This Christmas will probably be the best yet for internet retailers, according to the market research firm Comscore Networks.

Thanksgiving holiday in the US, internet sales rose 34% to a fresh record of $2bn (£1.27bn), up from $1.5bn a year earlier, Comscore said.

IMF REPENTS OVER MALAYSIAN CRITICISM

The International Monetary Fund has praised Malaysia's economic performance, after a short recession last year, and admitted it was wrong to oppose fixing the currency to the dollar.

"The Malaysian economy has entered a recovery phase and appears to be well placed to benefit from a global recovery," the Fund said after annual meetings in the country.

There was a broad economic recovery with unemployment below 4%, inflation below 2% and factories running at 80% of capacity, the fund said.

It expects 3.5% economic growth this year - from 0.7% in 2001 - even though private investment remains weak.

EU PROPOSES NEW MERGER RULES

The rules governing company mergers have been overhauled by the European Commission after three of its bans were overturned by courts.

"The reforms will significantly improve our merger control system, making it, I believe, a model to be emulated worldwide," EU Competition Commissioner Mario Monti said in a statement.

NEPAL ECONOMY HITS 20-YEAR LOW

Nepal's economy has shrunk for the first time in almost two decades as a bloody Maoist rebellion hits trade and manufacturing.

Figures released by Nepal's Central Bureau of Statistics show that the economy contracted by 0.63% in the 12 months to July 2002.

UK BANKS WARNED OVER HOME LOANS

Surging house prices are putting the British banking system under strain, according to credit rating agency Standard & Poor's.

S&P has added the UK to a list of countries where banks face the prospect of lower revenues or rising bad debt.

And it has identified a possible property market crash as the biggest single threat.

The move marks the first time that the British banking system has been included on S&P's 'at risk' list.