Anti-globalisation protestors have clashed with Spanish police at the EU summit in Barcelona.

Around 1000 protestors gathered in the city centre, and localised violence led police officers in riot gear to charge the crowd in an attempt to bring the initially peaceful gathering back under control.

The scenes were exactly what EU leaders and the Spanish authorities had feared, though they took place well away from the summit venue.

Speaking ahead of the summit, British foreign secretary Jack Straw had urged protestors to demonstrate peacefully.

"What one looks for is people having the right peacefully to demonstrate and express whatever views they have in a peaceful way, but at the same time the democratically elected heads of government and their ministers being able to discuss on behalf of the peoples of Europe how we make Europe more prosperous, and how in doing so we can spread prosperity across the world," he said.

But despite the violence, European leaders continued to focus on the EU's reform agenda top of their list of concerns.

While trade disputes with the US, military action against Iraq and the situation in Zimbabwe were among the issues discussed in the corridors of the conference venue, the Catalonia Congress Hall, economic reform is the key issue facing Europe's leaders.

The current holder of the EU's rotating presidency, the centre-right Spanish government of Jose Maria Aznar, is keen to see concrete achievements on the liberalisation of EU markets.

Speaking on Thursday after a meeting with the European employers' group Unice, Aznar warned that jobs would not be created unless there was reform.

Looking ahead to what the summit might achieve, Aznar predicted that the message from European leaders would be that the opening up of markets would go ahead, full employment would be achieved by 2010 and there would be a defence of "social dialogue".

But the EU has set itself high standards by which it will be judged.

At the Lisbon summit of 2000, EU leaders committed themselves to making Europe "the world's most competitive and dynamic knowledge-based economy by 2010".

While fully backing the aim, British ministers acknowledge the EU has a long way to go, and regard Barcelona as a "staging post" on the way to full liberalisation - backtracking from Tony Blair's earlier warning the Barcelona would be "make or break" time for the process of reform.

Speaking to journalists ahead of the summit, Jack Straw said Europe "can and should do better" on reform.

"This is the European Union's agenda, but it is also Britain's agenda as well. We have been playing a leading role," he said.

However, the electoral cycles of France and Germany lead observers to predict that their government's will block reforms that could undermine their social models.

There has been speculation that France in particular will block moves on energy liberalisation as it seeks to protect the employees of its giant EDF electricity company. Though French ministers say they want to see parallel progress on social issues and taxation, they reject suggestions that they are blackmailing their European partners.

But with British ministers listing progress on opening energy markets as one of their six key objectives for the summit, the indications are that a compromise will be struck on opening markets for business users while protecting monopolies in the domestic market, allowing all sides to point to a negotiating success.

"We are committed to energy liberalisation, we know that competition works...Whether we are able to make progress at Barcelona remains to be seen," Straw said.

In addition to forming a close working relationship with Spain's leader, Tony Blair also made a controversial visit to Rome in mid-February, where he and prime minister Silvio Berlusconi put forward a joint plan for the structural reform of Europe's labour markets.

But whether these new alliances will prove effective in pushing forward significant reforms remains to be seen.