* Deadlock over how much to boost emerging nations' power
* Brazil warns of IMF damage; Europe may be less generous
* IMF asked to develop principles for unwinding stimulus
* China wants IMF to supervise capital flows (Adds details from news conference)
By Lesley Wroughton
ISTANBUL, Oct 4 (Reuters) - Global finance chiefs made little headway on Sunday in overcoming long-standing disagreements over how much power rich nations should cede to major developing countries at the International Monetary Fund.
The IMF's 186 member countries, however, did find some common ground, agreeing the institution should develop a set of principles by April to guide nations as they get ready to pull back on extraordinary recession-battling measures.
"We're not out of the woods but we're well on our way," said Youssef Boutros-Ghali, Egypt's finance minister and chair of the IMF's policy-steering committee. "Exit strategies are being discussed but they are nowhere near being implemented now until we firm up the recovery in the world economy."
The IMF, which has committed about $175 billion in loans to countries around the world this year, says it will need more resources if it is to oversee the recovery of the global economy and help prevent future crises.
But this depends on giving emerging market economies a greater say. If a member's voting share is increased, they are required to increase how much money they provide the Fund.
IMF members aim to conclude talks on voting power by January 2011.
"The task of realigning quota shares with current global realities remains politically vexing," the IMF's board said in a report weighing in on the issue at the Fund's semiannual meeting here.
While the steering committee supported an agreement struck just more than a week ago by the Group of 20 nations to shift at least 5 percent of the IMF's voting power to developing economies, emerging powers said it was not enough.
Major emerging economies are demanding the developed world shift no less than 7 percent of its share to growing powers, like China.
"We can only hope that over-represented advanced countries will realise that they may do great harm to the Fund if they attempt to block or delay quota and voice reform," Brazilian Finance Minister Guido Mantega told the meeting.
He said the Fund needed to change so it could "cease to be regarded as mainly an American-European institution."
The demand for a 7 percent shift is meeting resistance from the developed world, particularly European nations, which do not want to give up too much of their own power.
Finance Minister Anders Borg of Sweden, which currently holds the European Union presidency, warned that Europe could become less generous in its financial support of the Fund if it lost influence over it.
"Adequate participation in the decision-making process ... is a prerequisite for our taxpayers' continued support of large financial contributions," he said.
GROWING DEMAND
Just a year ago the IMF was fighting to persuade governments of its importance. But the financial crisis and global recession has greatly increased demand for its loans and the advice it can provide countries struggling with budget deficits and sharp drops in investment and trade.
Allowing big developing countries to play a bigger role in the IMF could secure billions of dollars in fresh contributions for the organisation.
IMF chief Dominique Strauss-Kahn on Friday called for a huge boost in the lender's resources -- perhaps $1 trillion or more -- to let developing countries know it could help them in a crisis. He argued this would encourage them to stop accumulating foreign exchange reserves and lead to a better-balanced global economy.
But China, Brazil and India have said any increase in their contributions must be tied to changes in voting power.
China on Sunday said contributions should automatically adjust to reflect changes in the size of economies. [ID:nN04363536]
In a fresh role, the G20, which is taking the lead on managing the global recovery, has called on the IMF to help secure a more balanced pattern of global growth by reporting back to it on countries' policies and recommending changes.
China, which holds the world's largest foreign exchange reserves and has seen its financial markets buffeted by volatile capital movements, wants the activities of a reformed IMF to extend even further.
Speaking for China at the meetings, central bank Vice Governor Yi Gang said the IMF should strengthen its supervision over international capital flows and promote the relative stability of major reserve currencies. (Editing by Andrew Torchia and Tim Ahmann)