Geithner to urge bold G7 recovery moves: U.S. official

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner will urge his Group of Seven counterparts this weekend to take bold action to pull the global economy out of recession, prop up financial institutions and strengthen regulation, a senior Treasury official said on Wednesday.

Geithner, who arrives in Rome on Friday to meet with G7 finance ministers and central bank governors, will brief them on the Treasury's newly announced plans for revamping the U.S. financial bailout program.

"We will certainly be asking the others about their plans and encouraging them to take bold measures to help sustain the global economy," a senior Treasury official told a news briefing on Geithner's plans for the meetings.

Since taking office about two weeks ago, Geithner has phoned several G7 counterparts to discuss global economic woes. But the meetings on Friday and Saturday will be his first opportunity to present the Obama administration's new economic and financial stability agenda to the G7.

"It's going to be important for everybody to hear how Secretary Geithner sets his agenda because how the U.S. approaches its agenda will have an important influence on the international agenda," the official said.

Asked whether Geithner would be seeking an endorsement from G7 colleagues for the multi-pronged approach the Obama administration is taking to stimulate the U.S. economy and prop up its fragile banking system, the official said: "I think it's going to be judged on whether we restore health to the financial system and it gets credit going."

"This is not going to be decided in one day, there's many details that have to be implemented," the official said.

In the discussions, Geithner will be "exploring" whether G7 member nations are taking adequate measures to combat recession.

"It will be a focus of the weekend's meetings to encourage others to take bold and vigorous action," the official added.

U.S. PLANS CRITICIZED

Geithner's plan to repair the U.S. banking system on Tuesday failed to win over investors who labeled it as underwhelming and vague, triggering a Wall Street sell-off.

A key element was a public-private investment partnership that would buy $500 billion to $1 trillion in illiquid assets now weighing on bank balance sheets, but Geithner offered no details on how it would work.

"We're going to move forward very quickly to come out with detailed design elements on these proposals I outlined yesterday," Geithner told the U.S. Senate Budget Committee on Wednesday.

This will happen in the next several weeks, and by that time the Treasury will be able to tell whether more taxpayer funds are needed, Geithner said.

Some European governments also have expressed unhappiness over so-called "buy American" provisions that have been included in the economic stimulus bill moving through Congress. The Treasury official said the Obama administration would live up to its obligations to respect international trading rules.

"We have no intention of violating or acting inconsistently with our WTO obligations," the official said. "Secretary Geithner has received questions and I'm sure that he will receive more and I'm sure that he'll explain exactly that."

The official also said the G7 will discuss currencies as it always does, but he emphasized that it was important for countries to focus on measures that would restore economic demand.

He declined to say whether the G7 communique would mention anything on currency fluctuations.

Geithner later on Tuesday also did more damage control with Chinese officials after angering them by saying in written answers to Senate questions that President Barack Obama believes China was manipulating its yuan currency.

He spoke by telephone with Chinese Finance Minister Xie Xuren, two days after speaking with Vice Premier Wang Qishan, the Treasury said.

Geithner and Xie "affirmed the need for continued high-level dialogue between appropriate counterparts on both sides to make progress on key economic issues of mutual interest," the Treasury said in a statement.

(Additional reporting by Glenn Somerville; editing by Gary Crosse)