UPDATE 1-Australia urges firm action on financial crisis

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By Claudia Parsons and Lesley Wroughton

UNITED NATIONS, Sept 23 (Reuters) - Australian Prime Minister Kevin Rudd said on Tuesday the global economy needs a U.S. financial bailout to be enacted quickly and the proposed plan in Washington was a "good and strong" measure.

Rudd said he had met officials from the U.S. Federal Reserve and the World Bank during a visit to New York for the U.N. General Assembly and had discussed the financial turmoil roiling world markets.

The architects of a $700 billion bailout plan urged U.S. lawmakers on Tuesday to act swiftly or face dire economic consequences as global stock markets fell for a second day on growing concern the rescue may be delayed.

Treasury Secretary Henry Paulson told lawmakers during five hours of grueling hearings that the bailout was "sad" and "embarrassing," but needed to stave off a deep recession and restore confidence in markets.

Rudd said it was time for decisive action and urged U.S. lawmakers not to hold up the bailout plan.

"We're facing a global financial crisis and my appeal to our colleagues, both Republicans and Democrats, in the House and the Senate is that the global economy needs these measures to be dealt with quickly," Rudd said.

"We welcome this package, it is a good and strong measure from the U.S. administration at a time when global financial markets are under considerable stress," he told reporters at the United Nations after meeting World Bank President Robert Zoellick.

Rudd said Australian banks had strong balance sheets and the national budget of his country was in an enviable position with a surplus that would allow his government to deal with the ripple effect of the global crisis, including a softening of economic growth.

"The response from those in the investment community that I spoke with today is that Australia's main banks are seen to be strong and are robust also in the market place," he said.

"Australia is well placed to weather the current storm," he said, adding that Australian central bankers were in contact with their U.S. counterparts on the full and final details of the U.S. bailout package.

Zoellick said the financial crisis was expected to affect developing economies, already reeling from the "double jeopardy" of food and fuel price rises.

"What we now have to watch is to see what the ripple effects are in terms of exports and the trading system, and whether then this leads to some questions in terms of domestic investment in some of the developing countries," Zoellick said, adding that some countries' banking systems might be weaker.

The International Monetary Fund said earlier Australia can handle the slowdown in world growth, adding that its central bank's decision to ease monetary policy in the face of financial market turmoil was welcome.

The IMF forecasts Australia's pace of growth to slow to 2.7 percent in 2008 from 4.3 percent last year, when booming commodity prices had fired up growth but also fueled inflation. (Editing by Doina Chiacu)