CNN- EU urges global action to end meltdown
European leaders are calling for unprecedented levels of global coordination to tackle the financial crisis that continues to hit share prices around the world.
The economic turmoil will be the focus of the two-day, 43-nation Asia-Europe Meeting, which opens Friday in Beijing, according to European Union President Jose Manuel Barroso.
Barroso was speaking at the EU’s Beijing office in Thursday as stocks in Europe followed Asian markets downwards in the wake of a dramatic day on Wall Street that saw the Dow Jones index falling more than 500 points.
Leaders hope this week’s summit in China will help bring agreement on a response to the crisis ahead of a November 15 meeting hosted by U.S. President George W. Bush in Washington.
“We need a coordinated global response to reform the global financial system. We are living in unprecedented times and we need unprecedented levels of global coordination,” The Associated Press reported Barroso as saying. “It’s very simple. We swim together or we sink together.”
Barroso outlined no specific proposals but said a solution needed to be based on transparency, responsibility, cross-border supervision and global governance. He also said the world’s financial system needed “major reform.”
The current financial turmoil was sparked by the U.S. housing market collapse and a credit freeze in the United States and around the globe that is showing signs of affecting economic growth.
The fears of recession are continuing to cause turbulent swings in stock markets. London’s FTSE 100 index of leading shares was down more than 4 percent by 1010 GMT and Germany’s DAX 30 was down by 3 percent. France’s CAC 40 however was down by more than 2 percent.
In Tokyo, the Nikkei declined 2.5 percent by late afternoon while South Korea’s KOSPI closed down 5 percent. The All Ordinaries index in Australia declined 4.4 percent, and Hong Kong’s Hang Seng index was down 3.5 percent.
The Asian indexes declined after the Dow Jones industrial average lost 514 points, or 5.7 percent, on Wednesday.
Amid the wild swings in both stocks and commodities over the last few weeks, “fundamentals matter very little right now” in the U.S. market, said Ned Riley, chief investment strategist at Riley Asset Management.
He said that most of what is happening is being driven by traders with a very short-term perspective. Watch how the markets progress
On the upside, lending rates continue to improve, as the efforts of world governments to stabilize financial markets started to kick in. But any relief about the improvement in the credit market has been overshadowed by recession fears.
“Some of these programs are starting to work, but it’s going to take a while for borrowing to reach the consumer,” he said.
The declines on these markets comes after the Dow Jones industrial average lost 514 points, or 5.7 percent, on Wednesday — the Dow’s seventh worst ever point loss.
“The credit crunch seems to be behind us, and we are shifting focus to corporate earnings and economic conditions, and clearly both are deteriorating,” Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong, told The Associated Press.
Main Street bank Wachovia — which is due to merge with Wells Fargo — reported a heavier-than-expected third quarter loss of $23.9 billion. Will volatility continue, asks Todd Benjamin
Internet company Yahoo said it would cut its workforce by 10 percent following net income decline of 51 percent, while pharmaceuticals company Merck said it will lose 12 percent of its staff.
And aircraft maker Boeing said its earnings had dropped 33 percent through a prolonged industrial dispute.
Meanwhile, White House spokeswoman Dana Perino said the world financial crisis summit, intended to “agree on a common set of principles” for reforming regulation of the markets, will take place in Washington on November 15.
Bush will invite the leaders of the G20 group of countries “to discuss the financial markets and the global economy,” added Perino.
French President Nicolas Sarkozy last weekend emphasized the need to bring Asian states into the discussions. “We must make haste, because we must stabilize the marketplace,” he said at a meeting at Camp David with Bush. “This is a worldwide crisis, so therefore we must find a worldwide solution.”
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