World finance leaders expressed cautious optimism on Saturday that Europe is making progress towards containing its debt crisis but said it was critical for all advanced economies to step up the pace of policy reforms to rebuild confidence.

In a communique after two days of talks, members of the International Monetary Fund warned that global economic growth was decelerating and that substantial uncertainties and downside risks remained.

"There was no objection to the recommendation that we gave to the membership, which was A-C-T," said IMF Managing Director Christine Lagarde, spelling out the word letter by letter.

The institution's steering committee acknowledged that the global situation was less dire now than six months ago, said Singapore's Tharman Shanmugaratnam, who chairs the committee. But equally, they acknowledged the economic environment was tough, he added.

Reports from the IMF this week downgraded global economic growth forecasts for the second time since April and warned of the need for policy action in advanced economies, including the United States, to deal with their debt problems, a hangover from the global financial crisis.

IMF members adopted a global policy check-list on Saturday, detailing what they must do to safeguard global growth, and they agreed to review progress at the next IMF meetings in April.

The call for action reflected some frustration among other governments at what they see as plodding progress in Europe and a lack of urgency from Washington to tackle its so-called "fiscal cliff" of government spending cut and tax rises due at the end of the year unless Congress acts.

"Asia alone can't carry the global economy," said Australian Treasurer Wayne Swan. "It is time for the other players to get off the benches and start to pull their weight on global economic growth again."

European leaders argued this week they had made considerable progress toward building a stronger fiscal and banking union, which German Finance Minister Wolfgang Schaeuble reiterated on Saturday, earning at least some recognition from the rest of the world.

"This broad framework offers a more promising strategy for addressing the crisis," U.S. Treasury Secretary Timothy Geithner said. "However, what is important is how it will be applied in practice."

The IMF meeting was held amidst some small protests through the week. On Saturday about 300 hundred demonstrators, some waving wads of fake note bills and dressed in grotesque costumes meant to mimic the super rich, walked down the luxury shopping street of downtown Tokyo near the meeting's venue. One activists said they were protesting against the IMF's strangle-hold grip on the global economy.

(Reporting by Reuters IMF team; Writing by Neil Fullick; Editing by Emily Kaiser)