But ethnic strife and the need for national reconciliation also figured prominently.

French President Jacques Chirac hailed the introduction of the new European single currency, the euro, in his New Year's message broadcast on France-2 TV.

Balloons launched to celebrare the euro

"The creation of the euro opens up a new era. The euro is going to change Europe, and first and foremost people's mentalities," he said.

"For us, the French people, it represents opportunity. The euro will give us greater choice in our purchases, lower prices, a new share of markets, new investment and thus employment prospects."

German Chancellor Gerhard Schröder said Europe had given his country "the opportunity for a unique development in peace and prosperity" and made German unification possible.

In his televised address, he said Germany intended to launch important reforms in finance, employment policy and agriculture when it took over the European Union presidency in 1999.

Mr Schröder also emphasized the need to work on "an international financial architecture" that would prevent speculation from "ruining entire national economies".

"When Indonesia, Thailand or Brazil slide into a crisis because of currency speculation, this does not just involve mere figures, but the fates of thousands and thousands of people who have been deprived of the bases of their lives and have been bitterly disappointed in their hopes," he said.

Indonesian President B J Habibie, whose country was one of the worst hit by the financial turmoil that swept large parts of the world in 1998, admitted that the year had been a difficult one, with severe economic hardship and social instability.

B J Habibie: Hardships in 1998

"We had a lot of hardships in 1998. We still cannot completely overcome the economic and monetary crisis, which began in the middle of 1997. As a result, the unemployment rate continues to rise. The number of impoverished people naturally continues to rise," he said, in a New Year's message broadcast by Indonesian TV.

"The economic crisis has had a wide-ranging impact on our social and national life. The social, political, defence and security stability have been disrupted. Social instability has been evident in the form of tension, riots, looting and other forms of violence," he added.

"At the end of 1998, let us contemplate the dark sides of our people's life. May this contemplation awaken us to the extent that we can return to our dignity as a great nation."

Mr Habibie, who came to power in May when President Suharto stepped down after 32 years in office, highlighted his government's efforts to curb inflation, stabilize the rupiah exchange rate and improve the distribution of goods and services. These, he said, had prevented Indonesia's economy from "sliding deeper into the abyss".

He pledged to continue to "take measures to restore the economy", to "create clean and professional governance" and to hold multi-party elections in June.

Czech President Vaclav Havel warned that new walls were growing in Czech society.

"These new types of walls not only separate individuals or various social groups from each other but, to an alarmingly growing extent, they also separate ethnic groups from each other," the CTK agency quoted him as saying.

"They have the form of anti-Romany moods, anti-German ones, anti-Russian, and anti-American, they are sometimes anti-African or anti-Arab," he continued.

Mr Havel himself was drawn into a row earlier in the year over a proposal by residents on a housing estate in a town in northern Bohemia to build a wall to separate them from Romanies living on the same estate.

Yugoslav President Slobodan Milosevic's New Year message, read out on Serbian TV, dwelt on the situation in war-ravaged Kosovo, where armed ethnic Albanians are pushing for independence from Serbia.

1998 has seen many clashes between Serbian police and ethnic Albanians

Mr Milosevic said Yugoslavia had resisted pressure aimed at severing Kosovo from the rest of Serbia and declared that 1999 should be devoted to preserving Yugoslavia's sovereignty.

"Pressures that culminated this autumn were applied with the goal of emancipating Kosovo to such an extent that its separation from Serbia, that is Yugoslavia, would be easy and logical," he said.

"The year 1999 should be devoted to the preservation of Yugoslavia's sovereignty, the affirmation of the truth about our history and our present, Yugoslavia's linking with the entire world," he added.

Indian Prime Minister Behari Vajpayee stressed that there was no place for religious bigotry, and said his government was committed to maintaining social harmony and peace.

In his New Year message, quoted by the Indian PTI news agency, Mr Vajpayee said he wanted India to step into the next millennium as a strong and powerful country where "every citizen, irrespective of his caste or creed, could live in a prosperous, peaceful and amicable atmosphere".

Iranian President Mohammad Khatami used his New Year message to Christians in Iran and throughout the world to promote the theme of "dialogue among civilizations", urging respect for different viewpoints, the Iranian news agency IRNA reported.

President Khatami: Message to Christians

Mr Khatami said people everywhere should interpret the teachings of Jesus Christ "with emphasis on compassion for fellow human beings, respecting others, dialogue with the opposition, tolerance and detente towards others".

"I hope the year 1999, which is a link between the two millenniums, will be a year filled with blessings, peace, cordiality and love among men," he said.