World leaders called for an urgent overhaul of international financial systems after another day of steep stock market falls led to renewed panic over the slumping global economy.

Asian and European leaders meeting in China promised wide-ranging and effective reforms, as UN Secretary General Ban Ki-Moon also called for quick and meaningful change.

"Leaders pledged to undertake effective and comprehensive reform of the international monetary and financial systems," the 40-member Asia Europe Meeting (ASEM) said in a statement released late Friday.

"They agreed to take quickly appropriate initiatives in this respect, in consultation with all stakeholders and the relevant international financial institutions."

Leaders also called on the International Monetary Fund to "play a critical role" in helping countries most in trouble, should they ask for assistance.

Ban joined chief executives of key UN institutions in urging coordinated and effective change when leaders of 20 industrialised and emerging powers meet in Washington on November 15.

"The market and regulatory failures that have led to this (financial) crisis must be addressed as a matter of urgency," a joint statement from the UN summit said.

"We reaffirm the need for meaningful, comprehensive and well-coordinated reform of the international financial system and pledge our support to this end."

Fresh calls for action

The fresh calls for action came after a slew of gloomy corporate and economic news pushed markets into further losses, with Tokyo's dizzying 9.6 percent slump spilling over to Europe, where London's FTSE plunged 5.0 percent.

"The best word to describe what's going on right now is panic," said Credit Suisse strategist Satoru Ogasawara.

Wall Street followed other exchanges downwards as mounting evidence signalled that major economies are heading for recession.

The Dow Jones Industrial Average slumped 312.30 points (3.59 percent) to close at 8,378.95, capping a week when the US blue-chip index dropped more than five percent.

Iceland's government said it had asked for $2.0-billion from the International Monetary Fund, the first Western country to do so since 1976, after the collapse of its banking sector.

Stricken nations

The IMF said it had tentatively agreed to the loan and announced it had set aside more cash to rescue stricken nations.

"The IMF has more than 200 billion dollars of loanable funds and can draw on additional resources through two standing borrowing arrangements with groups of IMF member countries," it said on its website.

French auto giants PSA Peugeot-Citroen and Renault ordered huge production cuts, while Japan's electronics giant Sony Corp. and Europe's biggest airline Air France-KLM issued profits warnings.

In Britain, official figures confirmed the country was about to enter a recession while Turkey's central bank took action to strengthen bank liquidity and prop up its slumping currency.

Chrysler LLC, the number three US automaker, said it would cut up to 5,000 white-collar jobs by the end of the year as prospects in the sector grow dimmer.

ArcelorMittal, the world's biggest steel producer, shut smelting furnaces on a temporary basis in France, Germany and Belgium, according to union chiefs who met with management.

New figures showed industrial confidence in both France and Italy had fallen to the lowest level since 1993. In Spain, the unemployment rate jumped to 11.33 percent — the highest in more than four years.

New figures meanwhile showed Britain's economy shrank by 0.5 percent in the three months to September, compared with the previous quarter, marking the first contraction since 1992.

Nouriel Roubini, an economist at New York University who has been warning for two years of a deep crisis, said the turmoil is far from over and that "policymakers may soon be forced to close financial markets as the panic selling accelerates".

Leaders from the more than 40 members of the Asia Europe Meeting (ASEM) used the first day of talks here to discuss the worst economic meltdown since the 1930s, with attention turning to climate change and energy on Saturday.

AFP