WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Friday that if Europe mismanages its crisis it could slow U.S. growth but said the U.S. financial system could handle any resulting pressures.

"The U.S. financial system is in a very strong position to withstand the foreseeable pressures we might face from Europe," he said in an interview on American Public Media's Marketplace program.

Geithner said that, on balance, Europe was making headway in efforts to deal with its sovereign debt crisis.

"I think they've made a lot of progress in the last few months in trying to bring back a measure of calm to their financial markets," Geithner said.

Concern about spillover from Europe's crisis led member countries of the International Monetary Fund to agree last weekend to pledge an additional $430 billion to strengthen its war chest in case other countries are adversely affected.

Geithner, who heads to Beijing with Secretary of State Hillary Clinton next week for the latest round of Strategic and Economic Dialogue talks between the two countries, was cautious when asked to assess relations between the two countries.

"Better. Better than it was," he said, noting that a 13 percent real appreciation in the yuan's value was "pretty good for us" since it reduces the competitive price advantage that Chinese-made goods hold over U.S. products.

Geithner and Clinton will discuss a full range of issues, potentially anything from cooperation on efforts to curb Iran's nuclear ambitions to currency values in two days of talks May 3-4. He cited progress in several areas.

"There's better protection for intellectual property rights in China, less piracy against U.S. firms, and China is gradually dismantling a range of the subsidies that their firms enjoy which gives them an unfair advantage," he said.

There was still work to do, Geithner added, but "the basic direction of reforms in China is fundamentally in our interest."

(Reporting By Glenn Somerville; Editing by Chizu Nomiyama)


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