G-7 says nations will work to steady global markets

Confronted with flagging US growth and market turmoil, the world's top economies urged coordinated action to restore confidence in the global financial system, but refused to issue across-the-board prescriptions to boost growth.

The Group of Seven industrialised countries, in a joint statement on Saturday, warned of risks in the troubled American economy and housing sector, but leavened that with assurances the world's biggest economy would grow this year, though at a slower pace.

"The world confronts a more challenging and uncertain environment than when we met last October, though its fundamentals as a whole remain solid," G-7 finance ministers and central bank governors said.

The officials, from the United States, Japan, Germany, France, Britain, Italy and Canada,also pledged to take action on their own and together to "secure stability and growth in our economies," without outlining specifics.

The meeting in Tokyo took place amid moves by the US to shore up demand. Congress on Thursday passed a $168 billion stimulus package of tax rebates for American consumers, business tax write-offs and other measures. The Fed slashed a key US interest rate by 1.25 points to 3 per cent late last month.

Such moves, however, have not been taken by many of America's main trading partners. The European Central Bank, which sets policy for the euro-zone, left rates alone last week, and Japan has little room to lower its key rate of 0.5 per cent. The Bank of England, however, on Thursday cut its rate a quarter point to 5.