World leaders gather for crisis summit
AFP - 2 hours 54 minutes ago
TOKYO (AFP) - - World leaders are heading to Washington on Friday to craft a joint strategy to tackle the worst financial crisis in decades and thwart a deep global recession.
A slew of gloomy data raised the stakes for the leaders of the Group of 20 major rich and developing countries ahead of the key summit.
"The G20 will need to deliver some good news or we'll see a sharp drop in stocks on Monday," warned NAB Capital strategist John Kyriakopoulos.
Japanese Prime Minister Taro Aso will tell world leaders his country is ready to lend up to 100 billion dollars to the International Monetary Fund for financial lifelines to crisis-hit emerging countries, his government said.
The gains in stocks came despite another raft of bleak economic news.
France narrowly avoided following Germany into recession, but its economy barely grew in the third quarter, while a plunge in new car sales in Europe signalled tough times ahead for the region.
French-Belgian bank Dexia posted a 1.54-billion-euro quarterly loss while the BBC reported that Royal Bank of Scotland would cut about 3,000 jobs worldwide.
Asian markets snapped a three-day losing streak as investors scooped up beaten-down stocks, but analysts warned the outlook remained bleak as fears mounted of a long and deep global economic downturn.
"The rally is just driven by bargain hunting after the sharp dips," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC in Tokyo.
Japan's Nikkei index ended 2.72 percent higher, while Sydney finished with a gain of 1.4 percent and Shanghai rose 3.05 percent.
The yen rose as currency dealers fretted over the US economy. The dollar slipped to 97.12 yen, down from 97.67 in New York late Thursday. The euro dropped to 1.2736 dollars from 1.2779.
"There was no logical reason as to why shares rose, and worries remain over how the US will handle the financial crisis," said Yosuke Hosokawa, chief forex strategist at Chuo Mitsui Trust Bank.
The rebound in stocks came despite data showing a steep drop in both imports and exports in the United States, highlighting the slowdown in the world's biggest economy.
Germany on Thursday announced its economy, Europe's biggest, had fallen into recession in the third quarter.
But France narrowly avoided slipping into recession in the third quarter of 2008 with growth of 0.14 percent compared to the second quarter, Economy and Finance Minister Christine Lagarde said.
China, which recently announced a stimulus package worth 586 billion dollars, said its economy remained fundamentally strong and should maintain fast growth, playing down concerns over a slew of weaker data this week.
"The origin of the financial crisis is outside the country and its impact on our financial system is limited. The fundamentals of our economy are still good," National Development and Reform Commission vice chairman Mu Hong said.
The current financial crisis is rooted in the so-called subprime loans in the United States -- mortgages to buy houses and other forms of credit extended to underqualified consumers with less than solid credit histories.
The G20 summit, which starts late Friday with a working dinner at the White House, is expected to set down a number of economic goalposts and a dateline to prevent the ongoing financial meltdown from turning into a lengthy recession.
"The leaders attending this weekend's meeting agree on a clear purpose: To address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future," US President George W. Bush said Thursday.
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G20 members that will be taking part in the financial summit in Washington.
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