ISTANBUL, Oct 2 (AFP): The global economy is on unsteady legs, the World Bank (WB) warned Friday, saying that 2010 would be "a highly uncertain economic year" as other signals took the gloss off talk of a quick recovery.

The warning came as stock markets tumbled around the world and the United States, the world's biggest economy, prepared to unveil monthly unemployment figures expected to show the jobless rate rising to 9.9 per cent.

The International Monetary Fund (IMF) raised Thursday its economic growth forecasts for next year for most major advanced and emerging economies.

But experts warn that unemployment will rise, that recovery will be slow at best, and that there could even be a return to recession.

"We've broken the fall of the financial crisis but it's certainly too early to declare success," World Bank president Robert Zoellick said here in the run up to the annual meetings of the IMF and the World Bank.

"2009 will continue to be a difficult year and 2010... a highly uncertain economic year," he said, citing in particular the risk of inflation in Asian economies and the social effects of rising unemployment.

"We expect that unemployment will continue to go up and it'll be slow in coming down.... When you have large-scale unemployment those at the bottom are hurt the most and have the least cushion," he added.

IMF managing director Dominique Strauss-Kahn issued a similar warning about mounting job losses, telling reporters here: "I'm still very much concerned about unemployment... It casts a long shadow over the recovery."

In Europe, figures released Thursday showed the unemployment rate in the 16-nation euro zone hit 9.6 per cent in August.

Japan, meanwhile, said Friday that its jobless rate fell to 5.5 per cent in August - the first improvement in seven months.

Japanese shares closed down 2.47 per cent, however, after a plunge on Wall Street, where the Dow Jones Industrial Average lost 2.09 per cent Thursday amid fears about a possible setback in recovery for US manufacturing.

Jitters on the stock markets are mirroring broader concerns among experts about the stability and pace of the recovery.

Brian Coulton, head of global economics at international credit ratings agency Fitch, said he expected "the pace of expansion to remain weak by the standards of previous recoveries and fragile to shocks."

Fitch said the speed of global economic growth "may ease somewhat in mid-2010 as the boost from the inventory cycle and normalisation in world trade flows fades" but added that growth would remain positive.

Some economists have warned about the possibility of a "double-dip recession," with economic contraction following the current recovery.

Strauss-Kahn said Thursday that a return to recession could be a risk if major governments start winding up economic stimulus plans too early.

Inflation risks for Asia

Another report adds: China's growth next year could be hit by credit strains and east Asian economies face the risk of inflation if they hold interest rates low, Mr Zoellick also warned.

China "is going to face a challenge... because their credit growth has been very large and they're starting to bring that back and that could have a potential effect on their growth later in 2010," he told reporters.

He added: "If you look at the east Asian economies, you're starting to get some signs of faster recovery but also potential inflation."

He also said that if east Asian countries kept interest rates low in line with the US Federal Reserve "you could have some inflationary bubble effect."

The IMF forecast that China's economy will expand by 8.5 per cent this year and 9.0 per cent in 2010 -- better than the annualised growth of 7.5 per cent in 2009 and 8.5 per cent in 2010 it projected in July.

IMF for relying on fund's reserves

Meanwhile, the IMF called on countries Friday to rely on the fund's reserves in troubled times to avoid the build-up of big national reserves that spawn damaging global imbalances.

"Imbalances from the link of big reserves and building big reserves come from the fact that you might be afraid of being alone in facing speculation on your currencies," the IMF chief said at a news conference ahead of the IMF annual meeting here next week.

"There is another solution - less costly, more efficient - to avoid this... which is the pooling of reserves, which is the role at the beginning" of the creation of the IMF 65 years ago, he said.

Mr Strauss-Kahn said that some countries had built up big reserves after previous crises, including those in Asia, which contributed to the worst global financial crisis since the Great Depression.

In the Asian financial crisis of the late 1990s, countries such as Indonesia and South Korea turned to the IMF for aid to counter speculative attacks on their currencies but chafed at the conditions the IMF imposed on the financing.

The lessons drawn from the previous crises had led countries to believe they needed to build up their own big reserves, the IMF managing director said.