European markets were mixed Friday after a report showed the U.S. economy shrank by less than had been feared in the fourth quarter.

Although the U.S. economy shrank by 3.8 percent in the last quarter, some traders feared it could have been even worse, so the main European indices remained fairly flat.

Contributing to the somber mood was the news that 230,000 more people in the 16-nation euro zone joined the ranks of the unemployed in December.

At the World Economic Forum in Davos, Switzerland, world leaders gathered to discuss the worst economic conditions seen since World War II.

Among those attending, British Prime Minister Gordon Brown who called for prompt action. He says sweeping changes in the international financial system must be agreed in the coming weeks.

"We need an early warning system to prevent crisis, an early warning system of risk in any continent in the world economy," said Mr. Brown. "We need to replace the patchwork of current regulation by clear responsibilities and the accountability of not just banks, but non-banking financial institutions across the board such as hedge funds and all complex new markets and products."

"We need to agree international standards of transparency and disclosure and we need to reform and strengthen the international institutions, giving them power and resources to invest at a global level," he added.

Mr. Brown warned that not deciding on these measures would be disastrous. His hope is that a full agreement can be unveiled at the Group of 20 economic summit in London early April.

The one thing traders here can agree on is that the current economic conditions will not be changing for the better anytime soon.