Both US Treasury Secretary Timothy Geithnerand Chinese Premier Wen Jiabao warned about the global economic impact fromEurope's failure to deal with the Greek debt crisis, ahead of a teleconferencelater between the leaders of Greece,France and Germany.
Any statement from the teleconference onWednesday evening will be watched closely by traders gauging whether Greece willdefault on its mountain of debts any time soon.
Geithner sought to convince markets thatEuropean governments understood the severity of the crisis and that more wouldneed to be done.
Geithner, who is to join eurozone financeministers this weekend in a meeting in Poland, stressed that Europeangovernments have to make it clear they "stand behind" the financialsystem so that it can fund and finance the economic recovery.
"I think they recognize that they'regoing to have to do more to earn the confidence of the world," Geithnersaid in an interview with American news channel on CNBC.
He also dismissed suggestions Europe was about to have its own Lehman moment. "Thereis no chance that the major countries of Europewill let their institutions be at risk."
Geithner's urgings followed a similar callfrom Chinese Premier Wen Jiabao.
In a speech, Wen urged countries to tackletheir debt problems and make changes to restore global financial stability andsteady economic growth. "Countries must first put their own house inorder," Wen said.
Analysts said the international pressure onEurope appeared to be rising.
"That pressure is understandable giventhat European events remain the key threat to financial market stability andglobal recovery at the moment," said Vassili Serebriakov, an analyst atWells Fargo Bank.
French President Nicolas Sarkozy indicatedsome solution would be found, telling his Cabinet on Wednesday that France was determined to save Greece.
The markets, which have been at the mercyof events surrounding Europe's debt crisis allweek, took some comfort from talk of a substantive response.
In Europe, the FTSE 100 index of leadingBritish shares closed up 1.0 per cent at 5,227.02 while Germany's DAXwas up 3.4 per cent at 5,340.19. The CAC-40 in France rose 1.9 per cent at2,949.14 even though two of its biggest banks, Societe Generale and CreditAgricole, were downgraded by Moody's
The downgrades had been predicted all weekand some in the markets had feared they could have been bigger and included BNPParibas, too. SG, Credit Agricole and BNP Paribas were warned they could havetheir credit ratings downgraded further.
In the US, stocks pushed higher, extendinga two-day winning streak, despite figures showed retail sales were flat inAugust, against expectations for a modest 0.2 per cent rise. The Dow Jonesindustrial average was up 0.1 per cent at 11,122.31 while the broader Standard& Poor's 500 index was up 0.3 per cent at 1,176.24.
The euro was also fairly calm after a bigreverse over the past week or so - it was trading up 0.1 per cent at 1.3704.
Earlier in Asia, Hong Kong's Hang Seng reversedearly declines to eke out a 0.1 per cent gain to 19,045.44, while mainland China'sShanghai Composite Index also staged a comeback to gain 0.6 per cent to2,484.83.
South Korea's Kospi was the biggest loser, declining 3.5 per cent to 1,749.16as movements were magnified after a two-day holiday
In the oil markets, prices dropped backfrom $90 amid some profit-taking - benchmark oil for October delivery was down$1.53 at $88.68 per barrel in electronic trading on the New York MercantileExchange.
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