Crisis talks due in Washington; markets in tailspin

K G P Sirikumara, Director, Legal and Compliance Department, Central Bank handing over the report to Prof. W D Lakshman

TOKYO, October 10, 2008 (AFP) – The world’s major economies were to hold crisis talks later Friday in an attempt to end a massive sell-off on the global stock markets, as Asian shares were hit by another day of panic selling.

The talks in Washington were expected to see finance ministers and central bankers from the Group of Seven richest nations hammer out new emergency measures to contain the worst financial crisis since the Great Depression.

Ahead of the talks, the International Monetary Fund called for governments to work together to tackle the crisis, while reactivating an emergency lifeline first used to rescue ailing economies during the 1997 Asian financial crisis.

In Washington, officials said the United States could follow Britain’s decision to take preferential shares in troubled banks, effectively part-nationalising them, in a bid to increase liquidity in the credit markets.

But despite a wave of emergency interest rate cuts, rescue packages and massive injections of capital into the money markets, the world’s stock exchanges appeared no closer to pulling out of a tailspin.

Japan’s headline Nikkei-225 index fell more than 11 percent before trimming losses and ending the morning session 10.6