* EU leaders seek more efforts by task force on reforms
* Risks remains to economic recovery, tough sanctions sought
* Leaders work on strategy to enhance EU's global standing (Adds Rehn, deal on EU-South Korea trade agreement)
By Timothy Heritage
BRUSSELS, Sept 15 (Reuters) - European Union leaders will call on Thursday for more efforts to prevent Europe sinking into a new financial crisis and consider calls for tougher sanctions on countries that miss debt and deficit targets.
The leaders of the 27-country bloc, meeting in Brussels, will also discuss relations with big trade and political partners such as China and the United States to start drawing up a strategy to enhance the EU's standing on the world stage.
The EU's leaders say Europe's economic recovery is gathering pace after the global financial crisis, and the bloc almost doubled its economic growth forecasts for 2010 this week, but plenty of risks remain for the economic outlook.
"We won the battle on the euro. Problems are not over but we are in a much better shape than before the summer," EU President Herman Van Rompuy said in a video message, referring to the debt crisis that began in Greece and threatened the euro's future.
He said he would deliver a progress report on work done by a task force set up to improve economic policy coordination and protect against any repeat of this year's sovereign debt crisis.
"Important progress has been achieved ... more work is however required," he wrote in a letter to EU leaders.
The EU agreed in May on a 1 trillion dollar rescue mechanism for indebted countries, and the executive European Commission unveiled plans on Wednesday to tighten financial regulation with new controls on short selling and derivatives. It is also seeking agreement on tighter fiscal discipline. The task force, headed by Van Rompuy and grouping EU finance ministers, is due to recommend reforms at a summit in October and the Commission will make its own proposals on Sept 29.
EU finance ministers have agreed to submit budget plans for early review by the Commission and other EU governments but frustration is growing with the lack of progress in other areas.
GROWING PRESSURE FOR REFORMS
Pressure is growing for more emphasis on controlling debt levels as most of the 16 countries that use the euro have debts above the limit of 60 percent of gross domestic product that is allowed under the EU's budget rules.
There has also been little progress on making sanctions for breaching the rules all but automatic, and no clear response to calls for earlier penalties to ensure budgets do not exceed a deficit limit of 3 percent of GDP.
EU Economic and Monetary Affairs Commissioner Olli Rehn underlined the need for tougher sanctions in comments to the European Parliament, saying they should be "more biting" and introduced at an earlier stage of disciplinary action.
"We need clear rules. They must be credible and effectively enforced," Rehn said.
Dominique Strauss-Kahn, head of the International Monetary Fund, called on Tuesday for "bold action" by European leaders to reform EU budget rules, warning that without changes the bloc risks losing competitiveness.
The European Commission said this week the euro zone economy would grow by 1.7 percent this year, rather than the 0.9 percent it forecast in May, and the EU economy as a whole would grow by 1.8 percent, compared to the 1.0 percent estimated in May.
But EU leaders are still urging caution because of high debt levels and tensions in sovereign debt markets.
EU leaders have given no indication that Japan's intervention on Wednesday to curb the yen will be discussed at the summit although the Commission said after the move that coordinated action would have been more effective.
The leaders will, however, give their approval to the terms of a free-trade agreement with South Korea after securing the backing of Italy, which had sought delays in its implementation to protect its car industry, EU diplomats said.
Thursday's talks will be attended by EU foreign ministers who will take part in a debate on how to improve the EU's global standing. "We are punching now below our weight of 500 million people and 22 percent of world GDP," Van Rompuy said.
Europe is also facing pressure to give up some seats on the IMF's 24-member board to emerging market countries. Germany said on Wednesday that EU countries were ready to review the distribution of power on the board. (Additional reporting by David Brunnstrom; Editing by Matthew Jones)