Finance leaders from the world's rich nations struggled on Friday to agree on a unified approach to cure a credit crisis that threatens to trigger a deep global recession.
The Group of Seven -- the United States, Canada, Britain, France, Italy, Germany and Japan -- pledged a coordinated response but stopped short of backing a British plan to guarantee lending between banks.
Panicky financial markets were counting on the G7 to figure out some way to restore the normal flow of credit and shore up banks' balance sheets to avert the worst economic meltdown since the Great Depression of the 1930s.
"Markets and people the world over will be looking for a clear sign that governments of the largest economies in particular are prepared to act -- they are prepared to take firm measures that will make a difference," Alistair Darling, Britain's chancellor of the exchequer, told Reuters.
"We expect this weekend to show that we are determined to do that.
The G7 are expected to issue a communique summing up their views sometime after 6 p.m. (11 p.m. British time), but heading into their afternoon meeting there was little consensus on what they might say.
"We should not imagine that we will have a harmonized response that will be the same for everyone, quite simply because you cannot apply the same method to market situations that are different," French Economy Minister Christine Lagarde said. "What is important is to reach an agreement on common principles."
Dow's Wild Ride
The G7 members acknowledged they could no longer afford a country-by-country, case-by-case approach to crisis management after 14 months of turmoil.
The Dow Jones industrial average on Friday took a 1,000-point roller-coaster ride before ending down 1.5% at 8,451.19 as investors tried to pin down what might come out of a series of weekend meetings in Washington by finance officials from around the globe.
A European G7 official said one of the issues on the agenda for the G7 was whether U.S. Treasury Secretary Henry Paulson was "ready to say the United States will not let a bank of systemic importance go bankrupt and whether he is ready to say the United States is ready to take a stake in a bank. That's what's being discussed, we don't know what the answer is."
Italian Economy Minister Giulio Tremonti said a draft of the G7 communique that he read was "a bit weak."
"We see a text that was written in the old style, as if nothing has happened. We are not going to sign that text," he said in an interview with Italian television.
Italy had supported setting up a pan-European bank rescue fund, similar to a $700 billion (412 billion pound) U.S. bailout approved by lawmakers a week ago. The U.S. plan gives the Treasury Department authority to buy stakes in banks, although other European leaders have rejected that idea.
Britain this week committed 50 billion pounds to recapitalize its banks and offered to guarantee interbank lending by as much as 250 billion pounds to get credit flowing again.
Darling said he hoped other countries would follow Britain's plan. However, officials from two G7 countries said the group was unlikely to adopt the British approach this weekend.
"We will have to coordinate internationally, but beyond that there should be room for nation-specific solutions," German Finance Minister Peer Steinbrueck said. "What Great Britain has been doing is one approach, but that does not mean that it should be transferred to any other country."
Federal Reserve, Other Banks Step Up to Financial Crisis
