Pressure on G7 after muted response to rate cuts

Thu Oct 9, 2008 7:25am EDT
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By Keith Weir

LONDON (Reuters) - Finance ministers from the world's top economies faced calls on Thursday for united action after an emergency round of interest rate cuts and government support for ailing banks won only muted market support.

The United States signaled it could consider buying into banks to help get frozen funds flowing again and governments in Europe moved to try to restore confidence in financial firms hit by the worst crisis since the 1930s.

South Korea, Hong Kong and Taiwan lowered their interest rates after coordinated cuts on Wednesday from major central banks including the Federal Reserve.

The measures were designed to contain the market meltdown that has destroyed lenders from Wall Street to Iceland and left people worried about the security of their savings and jobs.

Attention was turning to a meeting in Washington on Friday of finance ministers from the Group of Seven wealthy nations.

Investors want politicians from the G7 and European Union to show they can cooperate more effectively rather than rely on piecemeal national initiatives.

British Prime Minister Gordon Brown has urged the G7 and EU to guarantee lending between banks, in line with measures Britain has introduced domestically.

However, EU states remained divided over the need to set up a financial supervisor with responsibility across Europe.   Continued...

<p>Traders sit outside the New York Stock Exchange, October 8, 2008. REUTERS/Brendan McDermid</p>