LONDON (AFP) - Europe's economic fundamentals remain sound but there is no room for complacency in the face of recent global financial turmoil, five key leaders said after a mini-summit in London Tuesday.
Seeking to reassure markets, the leaders of Britain, France, Germany, Italy and the European Commission pledged themselves to an "open global economy" to weather financial storms complicated by banking crises in France and Britain.
"Financial markets globally have suffered a prolonged period of turbulence triggered by the sub-prime crisis in the United States which spilled over into other financial markets," they said in a joint statement read out by summit host British Prime Minister Gordon Brown.
"Prompt and coordinated action has helped to ease the immediate problems, though there is no room for complacency," they added.
"At this time of global uncertainty we need to signal our commitment to an open global economy," the statement continued, while insisting that "the fundamentals of the European economies remain sound".
Speaking before the talks at Brown's Downing Street offices, the British leader's spokesman said the aim of the meeting was for the European members of the Group of Eight (G8) industrialised nations to coordinate their thoughts.
A meeting of G8 finance ministers next month is expected to take forward any specific proposals before the group meets in Japan in July, he added.
The talks come amid the continuing fall-out from the crisis in the US subprime mortgage sector that saw a squeeze on the global credit markets.
The market turmoil -- which triggered an emergency 0.75 percentage point rate cut by the US Federal Reserve last week -- has been compounded by a rogue trader scandal at France's Societe Generale bank and the near collapse of Britain's Northern Rock mortgage lender.
On Tuesday, stock markets in Asia and Europe rallied after an overnight rebound on Wall Street, recovering some of their recent heavy losses as investors pinned their hopes on another US interest rate cut, dealers said.
In the statement, the five leaders called for credit rating agencies to improve the content of their reports and address potential conflicts of interest voluntarily, or face regulatory measures.
They also said that financial institutions should make "prompt and full disclosure of losses", audit firms and supervisors should clearly detail the risks posed by banks' so-called "off-balance sheet" investments, and improvements must to be made to the EU's early warning on financial stability.
Brown will also be looking to gain support for his plans to reform global institutions like the IMF and the World Bank, which he believes are now ill-suited to the modern, globalised world.
British finance minister Alistair Darling underlined this point ahead of the talks.
"The problem we have got just now is that many of the structures we have, such as the (International Monetary Fund) for example, were designed ... for a completely different world," he told BBC radio.
French President Nicolas Sarkozy, whose predecessor Jacques Chirac was long accused of protectionist instincts to defend French companies, echoed his British host's views.
"We want transparency, we do not want protectionism. We want the markets to be free, we want free and fair competition," he said in French, responding to reporters' questions at the London press conference.
There was also concern in some quarters about the implications for the EU as a whole of a mini-summit involving only the leaders of the bloc's four biggest economies.
The EU's Slovenian presidency said the bloc's handling of the financial turmoil should be coordinated by all 27 countries.