WASHINGTON - The International Monetary Fund (IMF) on Monday warned Europe that there could be "large global spillovers" if euro area stakeholders fail to undertake decisive action to tackle the eurozone sovereign debt crisis.

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"A broadly sound recovery continues, but the sovereign crisis in the periphery threatens to overwhelm this favorable outlook, and much remains to be done to secure a dynamic and resilient monetary union," the IMF said in a report on eurozone conditions.

Periphery euro countries, including Greece, Spain and some other high-debt-leveled countries, are facing "daunting challenges," said the IMF.

"With deeply intertwined fiscal and financial problems, failure to undertake decisive action could rapidly spread the tensions to the core of the euro area and result in large global spillovers," the Washington-based international financial institution warned.

The IMF comments came after European Union finance officials failed to resolve Greece's sovereign debt crisis, just weeks before the eurozone member country faces default.