LONDON - The euro rose and European shares reversed losses on Friday on reports that the European Central bank may start lending funds to the IMF to help struggling euro zone countries. World stocks, however, dipped to near four-week lows, reflecting the fragile sentiment in the market with investors still worried that European policymakers are not acting urgently enough to resolve the debt crisis. Adding to the growing sense that quick action is needed, ECB President Mario Draghi told euro zone governments to act swiftly to get their beefed-up rescue fund into gear, expressing exasperation at a lack of progress so far. The fund is supposed to take over from the central bank the buying of bonds to support struggling euro zone economies, but efforts to boost its firepower have been snarled up by wrangling between Germany and France on the best way to do it. The ECB intervened in the bond market a day after Spain's borrowing costs at a sale of 10-year debt soared to their highest in the euro's history, as the crisis now entering its third year increasingly threatens Europe's bigger economies. Italian and Spanish government debt yields fell, but they held close to unsustainable levels as contagion fears and money market stress raised the pressure for policymaker action. The euro was last up 1 percent against the dollar at 1.3600 , extending earlier gains on speculation that the ECB, which has so far refused to be the lender of last resort, would be willing to go through the IMF to help struggling countries. Officials told Reuters on Thursday that euro zone and International Monetary Fund officials have discussed the idea of the ECB lending to the IMF, to provide the fund with sufficient resources for bailing out even the biggest euro zone sovereigns. “There are stories circulating about the ECB going via the IMF to lend money to countries that need help,” said Tom Levinson, FX strategist at ING. “The ECB would have to be involved in any potential solution for it to be credible so I would expect that to give the euro a bit of a lift. “Whether it will persist or not is highly debatable. This is a knee-jerk euro reaction and I think it will struggle to hold around this level. Negative headlines will remain in the ascendancy for the next few weeks.”