'The World'

by Carlos Hamann
Sat Oct 18, 5:42 PM ET

WASHINGTON (AFP) - French President Nicolas Sarkozy called for change in the global financial system before Saturday talks with US President George W. Bush, who is offering to host an international summit on the economic crisis.

Bush will make the summit announcement after Sarkozy and European Commission chief Jose Manuel Barroso arrive at the Camp David presidential retreat in Maryland, a senior administration official said, speaking on condition of anonymity.

The official did not give a date for the gathering.

Bush, Barroso and Sarkozy -- who is armed with a mandate from his EU colleagues to push for an overhaul of the financial system -- are to discuss plans for coping with the most severe global economic crisis since the Great Depression of the 1930s.

Also on Saturday the United Nations Secretary General Ban Ki-Moon offered "strong support" for a financial crisis summit involving world leaders along with representatives from the IMF and World Bank, which Sarkozy proposed on Friday at the 12th Francophonie summit in Quebec City, Canada.

"We both agree that there is no time to lose, and therefore, I fully subscribe to your idea of convening such a forum in early December at the latest," Ban said in a letter to Sarkozy.

Ban said he supported holding the summit at the UN secretariat in New York "in early December," saying this would "lend universal legitimacy to this endeavor and demonstrate a collective will to face this serious global challenge."

The White House preemptively warned that the Saturday talks will yield no new policy proposals.

Fallout from the crisis grew Friday as fresh job losses were blamed on the turmoil and bank chiefs faced a backlash, while stocks closed a tumultuous week with more wild swings.

In the United States, key data showed starts on building new homes slumped an additional 6.3 percent in September to the lowest level since the recession in 1991.

The annualized rate of 817,000 was down 31.1 percent from a year ago in the latest evidence of the bursting of the housing bubble that has ravaged the US economy and led to the global financial crisis.

Unemployment has grown across Europe and the United States, with key sectors such as car-makers badly hit. Analysts forecast worsening economic conditions in most advanced economies.

The finance industry's reputation took a new blow in France where Caisse d'Epargne bank said it lost about 600 million euros (800 million dollars) in a trading "incident."

A company official told AFP that a group finance director had been sacked over the loss.

Swiss newspapers Saturday angrily called on former top managers of banking giant UBS to return bonuses after the bank had to be rescued by the state this week.

"Mr. Ospel, pay back your bonus! Now! Immediately!" screamed the front page of tabloid Blick, referring to former UBS chairman Marcel Ospel, who was forced to resign this year over billions in losses in the US subprime mortgage crisis.

The headline reflected widespread public anger in Europe and the United States about the massive bailout of troubled banks, whose bosses have pocketed millions in bonuses in recent years.

Christian Levrat, leader of Switzerland's Socialist Party told a newspaper Saturday he plans to lodge a civil complaint against Ospel.

In South Korea, Finance Minister Kang Man-Soo is expected to announce Sunday an extra 30 billion dollars to help banks, businesses and the currency market, South Korea's Yonhap news agency said.

Asia's fourth-largest economy has been hit by devastating currency falls and the departure of foreign investors from the local stock market.

Pakistan's central bank moved to inject liquidity into the country's struggling financial system by cutting the amount of cash commercial banks must hold in reserve.

In Germany, Europe's biggest economy, banks will discuss Monday whether to jointly demand state aid under a brand new 480-billion-euro rescue plan to streamline what could be a chaotic process, Focus magazine said.

Belgian Prime Minister Yves Leterme said his government is also working on a plan to soften the effects of the financial crisis on the nation's economy.

"We are a hair's breadth away from a serious economic crisis," he told Le Soir in an interview published Saturday.

Meanwhile the Saudi stock market, the largest in the Arab world, which uniquely opens its trading week on a Saturday, ended the first day down 5.23 percent, shedding some of last week's gains.

The latest fall followed modest Friday losses on Wall Street as US investors remained cautious about whether the hundreds of billions of dollars being injected into banks by US and European governments will be enough to stabilize the markets.

However most global stock markets were firm on Friday after wild swings in the past week as some analysts said there was evidence of a "bottom" from the market meltdown of the past few weeks.