UK will not contribute to euro zone bailout - Osborne

Britain's Chancellor of the Exchequer George Osborne delivers his keynote speech on the second day of the Conservative Party Conference in Manchester, northern England October 3, 2011.

LONDON (Reuters) - Britain will not contribute to a euro zone bailout fund, Chancellor George Osborne said on Thursday following a deal to address the euro zone crisis.

"We are not going to contribute to the euro zone bailout, but we are members of the IMF ... We aren't turning our backs on the IMF," Osborne told BBC radio.

"The agreement last night did not say the IMF was going to put additional resources into the euro zone.

"We will only contribute to resources that are available to all members of the IMF around the world, we will not contribute to a fund that is hypothecated, that is directly linked to the euro zone," he said.

"We are not going to contribute to a special purpose vehicle that is set up to attract sovereign wealth funds or the Chinese government -- in other words, people with large surpluses. We've got a large deficit," he said.

Osborne welcomed the deal, saying Europe was now in a "much better place." He also warned that instability in the euro zone had a "chilling effect" on the British economy.

(Reporting Adrian Croft, Fiona Shaikh, Editing by Michael Holden)