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Group of Seven nations promise action on markets

The world's leading economies pledged to take action -- separately or together -- to secure stability in volatile global markets in a joint communique yesterday, but stopped short of prescribing specific measures.

The communique, issued at the end of an afternoon meeting of G7 finance chiefs and central bank governors, also warned of risks to the US economy, though growth was expected to continue this year.

The officials from the US, Japan, Germany, France, Canada, Britain and Italy also urged oil-producing nations to boost output, and encouraged China to accelerate the appreciation of its currency.

"Going forward, we will continue to watch developments closely and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies," the statement said.

The G7 had faced calls for increased coordinated action to deal with a deterioration of the US economy, financial market turmoil, high oil and commodity prices and heightened inflation expectations.

The various countries, however, have differed on what measures would be were appropriate. The US has urged other countries to pursue policies to boost domestic demand, while the Europeans said their economies were resilient and focused more on regulatory coordination.

The draft statement took note of the downturn in the global economy, but it did not forecast a recession.

"The world confronts a more challenging and uncertain environment than when we met last October, though its fundamentals as a whole remain solid," the statement said.

Senior ministers had already thrown cold water on hopes that this weekend's meeting would produce any sweeping policy agreements -- such as a unified move to cut interest rates -- to remedy market instability.

After talking with US Treasury Secretary Henry Paulson ahead of the G7 meeting, French Finance Minister Christine Lagarde said Paulson made clear the US had not called for others' stimulus packages, despite comments out of Washington favoring boosting demand.

"We have been surprised by the creativity of the media on this topic. Paulson didn't suggest that other countries should resort to fiscal stimulus," she said.

The remarks were similar to sentiments expressed earlier by other participants, who played down expectations for anything more than a message of unity among the industrialized nations making up the G7.

After a luncheon meeting, the officials met more formally in the afternoon at a Tokyo conference hall. Finance chiefs from China, Russia, South Korea and Indonesia were expected to join the G7 officials at a dinner later to expand the discussions.

Japan was expected to bring up the idea of a multilateral fund to help poor nations curb global warming. Tokyo has said it will push climate change efforts at a July meeting in Hokkaido of the G8, or the G7 plus Russia.

Financial markets have been battered since last month amid fears of a US recession and uncertainty about the extent of the subprime mortgage crisis that led to billions of dollars in losses at major banks.

Also See: G7 ministers urge output boost to rein in oil prices
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