Europe urges global finance reform as stocks take new hammering

PARIS, October 16, 2008 (AFP) – Calls mounted Thursday for an overhaul of the global financial system as stocks took a new hammering and Switzerland took drastic action to defend its prized banks with a 60 billion dollar package for UBS.

The Tokyo stock market suffered its worst loss for two decades, closing down more than 11 percent and European indices shed almost 6.0 percent in early deals, rallying to show losses around 3.0 percent later, after the Dow Jones index fell 7.8 percent.

Amid mounting recession fears, an emergency summit of the Group of Eight wealthy powers is expected to be held in November and President Nicolas Sarkozy of France said he would press Europe’s calls for drastic reform of the financial system when he meets US President George W. Bush this weekend.

EU leaders meeting in Brussels demanded greater oversight in Europe after the financial turmoil forced them to commit more than 1.8 trillion euros (2.45 trillion dollars) to banks and the money markets.

In a draft statement likely to be endorsed at a summit, the 27 EU leaders said they would set up a financial crisis cell to act as an early warning system and revived plans to beef up Europe-wide supervision of cross-border finance groups.