British Prime Minister David Cameron says he supports the suspension of sanctions against Myanmar (Burma) except for a ban on the sale of arms.
He was speaking after talks in Yangon with opposition leader Aung San Suu Kyi.
The sanctions include restrictions on industries such as mining and timber and an assets freeze imposed on nearly 500 people.
Mr Cameron said it was right to respond to signs of change "with care".
"All courses of action are full of risk,'' he said, ''but I think this is the right step forward.''
Ms Suu Kyi said suspension of the sanctions would strengthen the hand of the reformers.
The BBC reports that EU foreign ministers are to discuss policy towards Burma on 23 April. The sanctions are due to expire on 30 April.
