G7 finance officials vowed to protect major international banks from collapse [AFP]

Bush announced that all present at Saturday's meeting agreed on the need for a "serious global response" to the financial crisis.

"All of us recognise that this is a serious global crisis and therefore requires a serious global response for the good of our people," he said.

"The United States has a special role to play in leading the response to this crisis.

"That's why I convened this morning's meeting here at the White House and it is why our government will continue using all the tools at our disposal to resolve this crisis."

The G7 had issued a five-point plan on Friday aimed at easing the global credit crisis, and pledged in a statement to take "decisive action and use all available tools'' to try to resolve the crisis.

Under the plan, the G7 said it would seek to protect major banks from collapse.

It would also work to get credit flowing, support banks in raising cash from both public and private sources, seek to further insure deposits of money and work to revive the beleaguered mortgage financing market.

Henry Paulson the US treasury secretary, said the US government would move "swiftly and thoughtfully'' to implement a rescue package.

'Fundamental change'

But many market commentators were sceptical that the G7 could do anything to soothe the turmoil in the world economy.

Robert Scott, an international economist, said: "I didn't hear anything new here at all. Markets were looking for something much more concrete.

"We need the government to step in ... and help the poorest consumers suffering from these sub prime mortgages - that would be ideal.

"But that would be time consuming and we need something in the interim."

Bush's pledge

The G7 pledge for action came on Friday hours after Bush insisted his country "will solve" the global financial meltdown.

In a televised address from the White House, he blamed "uncertainty and fear" for the crisis and insisted US authorities had what they needed to confront the crisis.

"The United States government is acting. We will continue to act to resolve this crisis and restore stability to our markets. We can solve this crisis and we will," Bush said.

The comments came shortly before the Dow Jones index of leading US shares closed lower for the eighth-straight day on Friday, ending down by 1.5 per cent, or 128 points, at 8,451.

Markets across Asia and Europe earlier plummeted as lending rates between banks continued to rise despite this week's efforts by central banks to break the impasse in credit markets.

Japan's Nikkei has lost nearly a quarter of its value during the week [AFP]

The volatile trading in New York was matched in Europe, where Britain's FTSE-100 closed 8.9 per cent lower, Germany's DAX ended down by 8.4 per cent, and France's CAC-40 was off by 7.7 per cent.

In Asia, the Nikkei 225 suffered its worst one-day fall since the 1987 market crash, closing 9.6 per cent lower.

The Hang Seng ended down by 7.2 per cent.

At least seven countries suspended stock trading amid market chaos including Russia, Iceland and Brazil.

In Vienna, the stock exchange was suspended after stocks tumbled 10 per cent at the opening bell, and in Russia representatives of the MICEX and RTS exchanges said they had suspended regular trading until further notice under orders from financial regulators.

In Japan, the global credit crisis claimed its first financial institution on Friday as the government looked to prop up the country's smaller banks.

Ministers played down the risk of contagion from the collapse of Yamato Life, a small, unlisted insurance company, but investors remained unconvinced.

The Nikkei suffered its biggest one-day percentage loss since the stock market crash of October 1987 after the news.

It has lost nearly one quarter of its value during the week.

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