APEC urges fixing capital markets, avoiding protectionism

TRUJILLO, Peru, Nov 6 - Representatives of 21 Pacific Rim economies urged their peers on Thursday to take coordinated action to restore failing capital markets and warned against erecting trade barriers as global economic growth slows.

The meeting of the Asia-Pacific Economic Cooperation forum was the first of three by international finance officials and world leaders this week and next to tackle the world financial crisis.

Participants at the APEC meeting issued calls to give developing countries more say in straightening out the world economy at a time when emerging markets are driving global growth.

The International Monetary Fund said on Wednesday that large developing countries such as China and India will fuel the world economy next year while the United States and Europe try to thaw out their credit markets and jump-start growth.

Emerging countries want to be heard as they deal with the turbulence started by the U.S. sub-prime mortgage mess.

"We don't want unilateral actions which may affect emerging economies," said Roberto Tan, treasurer of the Philippines. "We would like to strengthen our cooperation in terms of financial solutions for this financial turmoil. We would like to see closer coordination on policy-making," he said.

APEC recommended that financial market rules be closely coordinated to prevent future crises, according to a Peruvian official familiar with the communique to be issued at the end of the group's two-day meeting on Thursday.

The statement also calls for a continued emphasis on free trade and warns against the temptation to retreat into protectionism as economies slow and jobs are lost.

Agreements forged in Peru, and at a meeting of Group of 20 finance ministers and central bankers this weekend in Brazil, will help set the framework for a summit of G20 and G8 world leaders next week in Washington.

Senior officials from the World Bank and IMF pushed for an expansion of the club of the world's richest nations -- the Group of Eight -- to include more countries like China, India, Brazil, Mexico, Saudi Arabia and South Africa.

The G8, which helps set the course of the world's economy, includes the United States, Canada, Japan and Russia -- all APEC members. Other G8 members are Britain, Germany, France and Italy.

A G8 expansion could dovetail with requests for major developing nations to contribute more resources to the World Bank and IMF in exchange for a greater say in how the two lenders are run.

Some think China, with nearly $2 trillion in foreign reserves, should do more for emerging markets at a time when the IMF's overall funding capacity appears limited and global growth is most robust in the developing world.

Calls for reforms have intensified as markets have plunged this year, prompting central banks to pump billions of dollars into the world financial system. (Additional reporting by Louise Egan, Terry Wade and Marco Aquino)