Flaherty says G7 watching Europe closely

Fri May 7, 2010 6:12pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty said on Friday that Group of Seven finance ministers were watching the Greek debt crisis with concern and that several euro zone countries need to exercise fiscal restraint.

"It's necessary that, first of all, that the countries involved take the steps they need to take and be clear about that, that they're going to take these steps toward fiscal restraint, fiscal responsibility. They will need some help, in all likelihood, in order to manage the issue as Greece did," he told reporters in Toronto.

"We are hopeful that there will be a strong policy response in Europe, the sooner the better," he said.

The comments come hours after the G7 finance ministers, in a call chaired by Flaherty, agreed to keep a close eye on financial turmoil caused by the Greek debt crisis.

Flaherty said the discussions were productive, but declined to give details, and said more talks were likely to take place on the weekend.

"We're also watching the economic developments in Europe closely ... we are concerned. We're consulting closely with our international partners," Flaherty said.

"Everyone understands the need for a clear, timely and strong response," he said.

Debt-stricken Greece has caused waves of volatility in financial markets, highlighted by Thursday's highlighted by Thursday's market rout, with fears mounting that Greece's difficulties will widen to other euro zone countries.   Continued...