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G7 discussing how to cope with effects of US credit turmoil

The G7 have begun discussing measures to cope with plunging stock markets and wild foreign exchange fluctuations caused by US credit turmoil, a press report said yesterday.

Britain, Canada, France, Germany, Italy, Japan and the US are considering an emergency meeting of their finance ministers and central bankers to try to help stabilize the markets, Japan's Jiji Press said.

Another option is to issue a joint statement without a meeting, but the G7 nations are cautious that such moves could further fuel investor anxiety, the report said without naming its sources.

French Economy Minister Christine Lagarde on Thursday said that G7 finance chiefs could gather before their next scheduled meeting in October if needed.

She said she did not think current turmoil would damage the economy.

Earlier, French President Nicolas Sarkozy's office released a letter the leader had sent to German Chancellor Angela Merkel, in which he urged the G7 to consider steps to improve market transparency but cautioned against over-reaction.

Lagarde said that she was very vigilant on market movements, but added that France's banking and insurance sector was in better shape to weather the crisis than the sector in other countries.

"We have every reason to feel confident about the situation of the French banking sector," Lagarde said.

However, Jiji quoted a senior Japanese finance ministry official as saying that there had been no specific proposal as of yet for an emergency meeting.
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