Europe wants fast action from world finance summit

BRUSSELS (Reuters) - European Union leaders are set to call on Friday for next week's global finance summit in Washington to launch rapid reforms to prevent a fresh outbreak of the credit crisis that has rocked the world economy.

France, which is chairing the meeting in Brussels, proposes that the EU demand a 100-day deadline for action such as entrusting the International Monetary Fund with the task of pre-empting or allaying future crises.

Germany and Britain insist the November 15 meeting of Group of Eight (G8) economies and emerging countries, which may also include U.S. President-elect Barack Obama's team, must open the way for root-and-branch change. U.S. President George W. Bush's outgoing administration has taken a more cautious stance.

"We want Washington to be more than just a nice meeting where everyone gets a chance to see Obama," a German government official said.

"We expect Washington to produce a clear time schedule, a clear mandate ... We know that the readiness to overhaul the international financial architecture will diminish as countries begin to feel better."

A spokesman for British Prime Minister Gordon Brown, who like French President Nicolas Sarkozy has urged an overhaul of the world financial bodies established after World War Two, said that reversing the global economic slowdown was just as vital.

"It is not the right time for short-term cuts in investment and public spending," the spokesman said. "There is now an emerging consensus across the developed world of the need to use fiscal policy in tandem with economic policy to support economic growth, and this is a point that the prime minister will be making (in Brussels)."

Shares in Asia, Europe and the United States tumbled again on Thursday on growing fears of a recession.

The IMF forecast an economic contraction of a size not seen since World War Two, and rate cuts in Europe failed to reassure markets amid an onslaught of bad company news, including automaker Toyota halving its profit forecast.

BOILED-DOWN AGENDA

Yet EU leaders will go to Washington buoyed by the belief that it was their 2.2 trillion euro ($2.8 trillion) round of bank rescues last month that helped avert a financial meltdown sparked by a credit crunch coming from the United States.

They are set to boil down their reform agenda to five key points after an earlier shopping list drawn up by France was deemed too extensive as a negotiating base.

According to an EU paper obtained by Reuters, they are:

-- to entrust the IMF with "primary responsibility" for recommending measures to restore economic confidence and for rescuing states in trouble

-- to submit credit rating agencies, criticised by some analysts for their failure to highlight the growing risk of a credit crunch, to tighter surveillance

-- to harmonize accounting standards around the world and review the use of the "fair value" rule, which requires institutions to value their assets at market value, even when the market for a given security is malfunctioning

-- to "take steps to ensure that no market segment, territory, or financial institution, including hedge funds, is beyond regulation or surveillance"

-- to implement codes of conduct to avoid excessive risk in the financial industry, including scrutinizing executive pay

"The summit should ... formulate a precise work program to allow the presentation within 100 days of concrete and operational proposals on those subjects identified as priorities," said the discussion paper, written by France.

The tone in Washington was less definite. A senior U.S. official said the so-called G20 summit would be "an opportunity to assess what transpired, evaluate the measures taken ... and agree on principles and processes to guide future actions."

(Additional reporting by Noah Barkin in Berlin and Frank Prenesti in London)