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Europe

G7 Leaders Call for Exceptional Measures to Solve Global Crisis

Top economic powers urged action to help the world scramble out of a deepening recession, as their stimulus plans came under scrutiny on Friday at high-stakes talks of the Group of Seven finance leaders.

A Japanese businessman walks in front of a stock price indicator board in downtown Tokyo, Japan

As the global recession bites deeper, the financial powers look for solutions

Top economic powers urged action to help the world scramble out of a deepening recession, as their stimulus plans came under scrutiny on Friday at high-stakes talks of the Group of Seven finance leaders.

The United States urged "exceptional" measures as Treasury Secretary Timothy Geithner arrived for bilateral talks with several other top delegates from the seven leading industrialized nations.

"These extraordinary times call for exceptional and complementary measures by all," Geithner's delegation said in a statement at the start of the two-day gathering of finance ministers and central bank heads.

"The Secretary will encourage his counterparts to take strong actions to address macroeconomic and financial sector challenges."

Geithner was set to discuss his vast US financial stabilization plan, which received a skeptical reaction in the United States and has prompted calls for more details.

"There is still some need for more elaboration" on the US financial plan, Canada's Finance Minister Jim Flaherty told reporters in Rome as ministers gathered for the G7 opening dinner on Friday evening.

Stimulus packages to come under scrutiny

Group of Seven finance ministers gather

The G7 finance ministers start talking tough Saturday

The G7 officials were to kick off their main talks on Saturday, comparing notes on stimulus packages and trying to forge a consensus on the next steps, including possible new rules for global finance.

"The first thing we need to do is make sure that our own financial systems in our countries are well regulated and therefore credible," said Flaherty, who was due to meet with Geithner on Saturday.

"Then we need to have some sort of international cooperation where we have validation of that integrity of finance systems. That's going to be a major topic of conversation here."

More measures of the crisis emerged on Friday, with data showing the euro zone economy slumped by 1.5 percent in the fourth quarter of 2008 and the European Union joined it and several individual EU countries in recession.

"The growth figures we have been given today are not really a surprise but are underlining the seriousness of the situation," said Jean-Claude Juncker, head of the Eurogroup of euro zone finance ministers.

"We do have the strong hope that in the last quarter of 2009 growth will be back and that in the course of 2010 the situation will greatly improve, but ... we have to live for a long period with the consequences of this crisis."

Protests and social unrest spreads

Protesters gesture and chant slogans as thousands of people gather to protest the government's handling of the economy outside the parliament building in Reykjavik

Protests have been gathering strength all over the world

As the ministers gathered, tens of thousands of people thronged a square in Rome under a sea of red flags to protest against the economic crisis. Fresh data on Friday showed Italy too is deeper in recession than expected.

Ahead of the talks, several delegates voiced alarm over protectionism, which they fear may undermine efforts to ease the downturn.

Japanese Finance Minister Shoichi Nakagawa has warned that his G7 delegation would take a "resolute stance" against the "absolute evil" of protectionism -- when countries take measures that favor their own economies at the expense of other.

Nakagawa said on Tuesday that the G7 nations -- Britain, Canada, France, Germany, Italy, Japan, and the United States -- were expected to discuss a sensitive "Buy American" clause in a pending US economic stimulus package.

Meanwhile, France has fiercely defended its plan to pump billions of euros into its struggling auto sector against EU charges of protectionism.

The Italian finance ministry said in a statement that as president of the talks it would take a stand against protectionism, push for "a minimum basic set of rules" on world financial regulation and discuss "food security issues."

World Bank president Robert Zoellick meanwhile told reporters here that the bank wants to persuade wealthy countries to set up a "vulnerability fund" to aid poor countries hit hard by the global financial crisis.

"I propose that developed countries agree to devote 0.7 percent of their stimulus packages to a vulnerability fund to support the most needy," he said.

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