Central America states seek to fend off US crisis

TEGUCIGALPA, Oct 4 (Reuters) - Central American and Caribbean countries will take out loans, spend more on job creation and boost agricultural activity in a bid to shield their economies from the spread of the U.S. credit crisis.

The U.S. housing downturn triggered one of the worst economic crises in decades, crippling the construction sector that employs thousands of immigrants and curbing the amount of money they send home to their families.

Regional leaders gathering in Tegucigalpa on Saturday said the tough economic situation in the United States would take its toll on remittances, exports and foreign direct investment.

"Central America has to find a way to protect itself," Honduras President Manuel Zelaya said.

Recent data suggest that waning job creation in the United States could prompt immigrants to return to their home countries, posing a problem to Central American governments that must meet increasing demand for jobs locally.

Nicaraguan President Daniel Ortega said Central American countries had agreed to boost farming activity in the region to help them overcome the crisis.

Central America and the Dominican Republic share a free trade agreement with the United States, which buys the bulk of its exports, including textiles and coffee.

The leaders said they would seek funding from the Central American Bank for Economic Integration of up to $400 million per country to boost local development programs.

The presidents of Guatemala, El Salvador, Nicaragua, Costa Rica and representatives from Panama, Belize and the Dominican Republic attended Saturday's meeting. (Reporting by Gustavo Palencia; Writing by Cyntia Barrera Diaz; Editing by Peter Cooney)