U.S. and Europe Union leaders agreed on Thursday to meet at the weekend to prepare for a global summit to overhaul the world's financial system, while fears of global recession continued to rattle markets.
Central banks renewed efforts to free up liquidity and unblock frozen lending, with further action from Switzerland, Britain and the European Central Bank.
French President Nicholas Sarkozy, currently representing the EU on the world stage, said at an EU summit in Brussels he would meet U.S. President George W. Bush on Saturday.
"If we can bring coordinated answers to the financial crisis, can we not bring coordinated answers to the economic crisis?" Sarkozy asked.
British Prime Minister Gordon Brown said the EU leaders had agreed on the need to reform the international financial system as the world faced its worst financial crisis in 80 years.
Underlining the problems, U.S. bank Merrill Lynch reported net writedowns of $5.7 billion from toxic assets and Citigroup reported a quarterly net loss of $2.8 billion.
Japan's Prime Minister, Taro Aso, said Washington may need to push yet more cash into its banks to restore investor confidence, shattered by a crisis that began with a U.S. housing market collapse and now threatens economies worldwide.
Switzerland's two largest banks — UBS and Credit Suisse — became the latest to say they were receiving emergency funding as the country's government and other investors moved to shore them up.
Wall Street stock index futures pointed to a positive open, but elsewhere stocks were under heavy pressure.
The pan-European FTSEurofirst 300 shed around 2.2 percent and Japan's Nikkei lost more than 11 percent.
"The markets are selling off stocks because investors still think the steps by U.S. authorities are not sufficient," Japan's Aso said.
MORE LIQUIDITY
The European Central Bank said it would provide up to 5 billion euros ($6.83 billion) to Hungary to pump up liquidity.. And the International Monetary Fund was in talks to find ways to help Ukraine's economy.
Lack of confidence remained among financial institutions. Banks deposited a record 210.8 billion euros at the European Central Bank overnight rather than lend to each other.
The Bank of England said as of next week it would create two new facilities for banks to access funds, which should remove the stigma that has become attached to using its present emergency lending system.
The ECB will allow banks to swap a larger range of their assets for central bank funds and offer more funds across a range of currencies in a new salvo to combat the crisis.
The bank-to-bank cost of borrowing eased a little as central banks continued to provide liquidity but their actions meant commercial banks did not have to go to each other for cash.
"The only provider of liquidity now is the central bank," said Guillame Baron, strategist at Societe Generale in Paris.
Governments around the world have already pledged $3.2 trillion in emergency measures including taking stakes in banks to help them stabilise.
EU CALL FOR ACTION
The 27 EU leaders called for action to combat economic decline, including support for industry.
"The European Council underlines its determination to take the necessary steps to react to the slowdown in demand and the contraction in investment and in particular to support European industry," it said.
The key decision, however, appears to have been backing for an overhaul of the current financial system, which was set up in Bretton Woods, New Hampshire, in 1944.
France, Germany and Britain called on Wednesday for leaders of the Group of Eight major industrialised countries to gather next month with the heads of emerging economies to discuss the more than 60-year-old financial architecture.
Within the banking industry, UBS said it would get a capital injection of 6 billion Swiss francs ($5.30 billion) from the government and would unload up to $60 billion of illiquid securities and other assets from its balance sheet to a separate fund entity under an agreement with the Swiss National Bank.
Credit Suisse, which announced a third quarter net loss of about 1.3 billion Swiss francs with 2.4 billion francs in fresh writedowns, said it would raise funds from investors including the Qatar Investment Authority, already a major shareholder.
Investors' overall focus, however, appeared to be shifting from the ravaged financial system to the backdrop of a declining world economy.
A Merrill Lynch poll on Wednesday showed 84 percent of fund managers see the world heading for a recession.
Underlining this, Germany slashed its forecast for 2009 economic growth to 0.2 percent from 1.2 percent on Thursday, citing the impact of the global financial crisis.
In Japan, meanwhile, a Reuters poll showed manufacturing business sentiment hit a 6-year low this month.
