FRANKFURT (Thomson Financial) - Euro group President Jean-Claude Juncker said second-round effects on inflation must be avoided 'at any cost' and dismissed France's plans to cut VAT on fuel to protect consumers' purchasing power.

On inflation, Juncker said the IMF 'is slightly too optimistic and that great vigilance remains essential' for all euro zone institutions and the ECB.

'Second round effects must be avoided at any cost,' he added, speaking at a news conference after the euro zone finance ministers' meeting here.

On oil prices, Juncker said 'we call on ministers to support the agreement we reached in 2005 in Manchester. There's no question of putting in place fiscal counter measures to rapidly rising oil prices'.

'Food prices, like petrol prices will remains at a high level for some time, so fiscal changes in the short term will not do enough to remedy the effects of high prices which will continue,' he added.

frances.robinson@thomsonreuters.com

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