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ECB's Draghi tells European leaders: hurry investment and reform

By John O'Donnell

BRUSSELS (Reuters) - The president of the European Central Bank urged the region's leaders on Thursday to speed along a new EU investment plan and renewed his calls for economic reform.

At a meeting of European Union leaders including Germany's Angela Merkel and France's Francois Hollande, Mario Draghi warned of the fragile state of the euro zone's economy where inflation is low as oil prices tumble, according to people briefed on discussions.

Speaking afterwards to reporters, Draghi limited his remarks to the need for investment and reform.

"It could be very effective provided it is speedy," Draghi told reporters, leaving a meeting where EU leaders discussed the launch of a 315-billion-euro investment plan, which is to start only in the middle of next year.

Choosing the projects to invest in is highly politically charged.

Draghi said the scheme could bolster confidence, adding that "it should be the opportunity for a renewed push towards structural reforms".

Inside the meeting, Merkel listened to Draghi's remarks without responding, according to one official briefed on the discussions. [ID:nL6N0U24X9]

Germany is sceptical about borrowing to invest, while its central bank is resisting a push by the ECB to print money to buy government bonds next year.

British Prime Minister David Cameron told his peers that its central bank's willingness to print money had helped its economy.

But Draghi has become increasingly worried about slack reform in countries such as France and Italy, which he fears will undermine the long-term boost from so-called quantitative easing (QE).

He wants countries to make a more binding commitment to shake up rules such as those for employing staff or taxation.

In public, Draghi's appeals have become increasingly strident. He warned recently that failure to change could damage the "essential cohesion" of the euro zone, signalling that the euro's survival depended on it.

But European leaders, grappling with Eurosceptics who want to scrap the euro currency, and with vested interests clinging to acquired rights, have little room to respond for now.

(Reporting by John O'Donnell; additional reporting by Robin Emmott; editing by Alastair Macdonald)