Asian and European leaders closed ranks today to try to bolster confidence among investors who fear that a global credit crunch has ushered in a deep and damaging world recession.
The worst financial crisis in 80 years has forced countries to work together to find ways to help shore up a financial system crippled by banks fearful of lending to each other.
But with evidence mounting that Europe is already in recession, analysts fear that co-operation in shoring up banking systems could be threatened as governments begin to turn their attention to reviving domestic demand.
"We must use every means to prevent the financial crisis impacting growth of the real economy," Chinese Premier Wen Jiabao said at the end of a two-day summit of 43 Asian and European leaders in Beijing.
Governments have pledged around $4 trillion to support banks and restart money markets to try to stem the crisis and have looked into introducing tougher financial rules to guard against any repeat.
Mr Wen said countries needed to strike a balance between innovation and regulation and between savings and consumption.
"We need financial innovation, but we need financial oversight even more," he said, adding that China's priority was to spur domestic demand to ensure the country maintained fairly fast, steady growth.
In the Gulf, finance ministers and central bank governors said at a meeting on coordinating policy that they would look at directing more government funds into banks and regional stock markets, Al-Arabiya television reported.
Saudi Arabia, the United Arab Emirates and four other Gulf states have so far adopted separate responses to ease the pressures of the liquidity crunch on their banking sectors.
According to the meeting's agenda, they would also discuss growing concern that foreign investment from countries hit by the crisis could be "liquidated", and reassess their foreign investment policies.
Any significant redirection of Gulf investment to domestic markets could be a concern for banks and other firms in the West which have eyed the huge sums in the region's state-run sovereign wealth funds as a potential source of capital while European and US credit and share markets are seized up.
"The retreat of the US and European economy will have a negative affect on the balance of payments in GCC (Gulf Cooperation Council) countries," read the agenda.
A senior Gulf official said most members were worried about the oil price.
Oil fell nearly $4 a barrel yesterday, dampened by fears of global recession and slowing fuel demand despite an OPEC oil producers' agreement to cut output.
Yesterday, private-sector activity in the euro zone's economy contracted at the fastest pace in at least a decade and data showed Britain's economy shrank 0.5 per cent in the third quarter - a much worse performance than economists expected.
A series of corporate profit warnings and job cuts triggered a sell-off in stocks from Tokyo to New York.
"The danger of a collapse (on financial markets) is far from over. Any all-clear would be wrong," German Finance Minister Peer Steinbrueck said in an interview released today.
"We are still in a dangerous situation," he told Bild am Sonntagnewspaper.
Emerging economies have been particularly hard hit by the crisis, forcing many to plunder their foreign exchange reserves to defend their currencies and financial systems.
Officials in Washington said those economies that qualify for a proposed new liquidity fund at the International Monetary Fund could be eligible for an unusually high level of funding.
Although the details of the package were not finalised, the plan, which may offer countries up to five times their IMF quota, could be approved as soon as next week.
It would allow certain emerging market economies to exchange local currencies for U.S. dollars to ease short-term credit strains, the officials said.
Iceland, where the financial system has all but collapsed, called on the IMF yesterday for €1.6 billion to help fix its broken banking system, restart currency trading and soften the blow from the global downturn.
The Washington-based lender said its staff in Reykjavik and Icelandic authorities had reached agreement on an economic programme that would be supported by the financial assistance.
Across Europe, banks have turned to government funds to ensure they could operate.
Belgian banking and insurance group KBC is seeking €3.5 billion from the government to boost capital, Le Soirdaily reported.
The newspaper said on Saturday the move was to give a clear, positive signal to the market before it opened on Monday after the bank's shares touched a 12-year low yesterday. A KBC spokeswoman said the bank was looking at various alternatives.
In the United States, PNC Financial Services Group Inc agreed to purchase ailing Ohio-based National City in a government-supported $5.6 billion deal that will create the fifth biggest US bank by deposits.
PNC was one of four regional banks that said they would receive cash infusions under a $250 billion bank recapitalisation programme, part of the US Treasury's wider $700 billion financial services rescue package.
The Treasury, which has already committed half that sum to nine of the largest US banks, was studying how it could give relief to bond and mortgage insurance firms under the programme, two sources familiar with the deliberations said.