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EU heads seek financial clampdown EU heads back financial clampdown
(40 minutes later)
European leaders in Berlin have agreed on the need to regulate all financial markets including hedge funds.European leaders in Berlin have agreed on the need to regulate all financial markets including hedge funds.
Leaders of Europe's major economies said a global solution was needed to the current financial crisis.Leaders of Europe's major economies said a global solution was needed to the current financial crisis.
German Chancellor Angela Merkel highlighted that leaders faced an "extraordinary international crisis".German Chancellor Angela Merkel highlighted that leaders faced an "extraordinary international crisis".
But leaders including UK Prime Minister Gordon Brown warned against reverting to protectionism in such a difficult economic climate.But leaders including UK Prime Minister Gordon Brown warned against reverting to protectionism in such a difficult economic climate.
The meeting in Germany is a precursor to the next G20 meeting, which is set to take place in London on 2 April. The Berlin gathering is a precursor to the next meeting of the G20 group of major developed and developing countries in London on 2 April, which aims to rewrite the rules of the global financial system.
'Supervision''Supervision'
"There is a need for a global new deal so that the world economy can recover" said Mr Brown to ensure an economy that is based on the "soundest principles"."There is a need for a global new deal so that the world economy can recover" said Mr Brown to ensure an economy that is based on the "soundest principles".
Leaders said there was a need for international institutions, including the International Monetary Fund, to play a greater role not just to help countries in financial trouble but to prevent countries from getting into such difficulties.Leaders said there was a need for international institutions, including the International Monetary Fund, to play a greater role not just to help countries in financial trouble but to prevent countries from getting into such difficulties.
Mr Brown said leaders had agreed that that the IMF needed access to at least $500bn (£348bn).Mr Brown said leaders had agreed that that the IMF needed access to at least $500bn (£348bn).
We all agreed that we can no longer tolerate the reward package system for traders and bankers French President Nicolas Sarkozy The comments in Berlin come amid ongoing volatility in world financial markets and uncertainty over the future of some of the world's key banks.We all agreed that we can no longer tolerate the reward package system for traders and bankers French President Nicolas Sarkozy The comments in Berlin come amid ongoing volatility in world financial markets and uncertainty over the future of some of the world's key banks.
Ms Merkel said: "We are making a commitment that all financial markets, products, and participants - including hedge funds and rating agencies - are of course subject to supervision and regulation."Ms Merkel said: "We are making a commitment that all financial markets, products, and participants - including hedge funds and rating agencies - are of course subject to supervision and regulation."
Details on such a plan need to be worked out before the meeting in London, she added.Details on such a plan need to be worked out before the meeting in London, she added.
Hedge funds, which typically attract wealthy private investors, have been criticised for their lack of transparency and oversight.Hedge funds, which typically attract wealthy private investors, have been criticised for their lack of transparency and oversight.
She added: "We will draw up a list clearly showing which the uncooperative jurisdictions are." Bonuses
As well as greater supervision of all financial markets and instruments, leaders underlined the need to reassess the issue of pay at finance firms.As well as greater supervision of all financial markets and instruments, leaders underlined the need to reassess the issue of pay at finance firms.
French President Nicolas Sarkozy added: "We all agreed that we can no longer tolerate the reward package system for traders and bankers."French President Nicolas Sarkozy added: "We all agreed that we can no longer tolerate the reward package system for traders and bankers."
There has been much criticism of bankers bonuses, which have been high, even as the performance of the banks they work for has been poor. There has been much criticism of bankers' bonuses, which have been high despite their bank's poor performance.
Car sector Leaders also said they wanted to crack down on tax havens.
French, Italian, Spanish, Dutch, UK and German leaders are hoping to take a common approach at a world financial summit in London in six weeks' time. Ms Merkel said: "As far as unco-operative players, tax havens or areas where non-transparent business is carried out are concerned, we need to develop sanction mechanisms. These must be made very concrete," she said
The G20 developed a plan on how to address the world financial crisis at a meeting in Washington in November; the meeting on 2 April is intended to build on that. She added that a list would be drawn up "clearly showing which the unco-operative jurisdictions are."
Different opinions
French, Italian, Spanish, Dutch, UK and German leaders are hoping to take a common approach at the London summit .
But analysts say reaching agreement among EU powers will not be easy.But analysts say reaching agreement among EU powers will not be easy.
The current Czech presidency of the EU, as well as and the European Commission, have voiced concern at attempts by France, Italy and Spain to shelter their car industries from the effects of the downturn.The current Czech presidency of the EU, as well as and the European Commission, have voiced concern at attempts by France, Italy and Spain to shelter their car industries from the effects of the downturn.
Capitalism must be given new moral foundations Nicolas SarkozyFrench President Protectionist forces bedevil EUCapitalism must be given new moral foundations Nicolas SarkozyFrench President Protectionist forces bedevil EU
The BBC's Rob Cameron in Berlin says Czech Prime Minister Mirek Topolanek - who is also in Berlin - will have a private meeting with French President Nicholas Sarkozy, following a very public row between the two countries.The BBC's Rob Cameron in Berlin says Czech Prime Minister Mirek Topolanek - who is also in Berlin - will have a private meeting with French President Nicholas Sarkozy, following a very public row between the two countries.
Mr Sarkozy has suggested that in order to secure government aid, French carmakers should move production out of their East European factories and back to France.Mr Sarkozy has suggested that in order to secure government aid, French carmakers should move production out of their East European factories and back to France.
Such disagreements are threatening to prevent Europe speaking with one voice, our correspondent adds.Such disagreements are threatening to prevent Europe speaking with one voice, our correspondent adds.
Rewriting the rules
Ahead of the Berlin meeting German Chancellor Angela Merkel renewed her calls for tighter oversight of financial markets. Financial markets have been volatile in recent months
There should be no more gaps in international controls, she said on Saturday.
Germany's finance ministry is pushing for stricter rules for hedge funds and better rating systems to avoid future meltdowns.
However some members - such as Britain - are less keen on a radical tightening of regulations, correspondents say.
Mr Sarkozy stressed he would not accept "a weak compromise, a cheap fix" in establishing the European position.
"Capitalism must be given new moral foundations," he said.
The agenda of the Berlin summit also includes strengthening international accounting standards, reform of the IMF and other financial institutions, as well as moves to restrict executive pay.
The London meeting in April will bring together leaders of the G20 group of major developed and developing economies, in an effort to rewrite the rules of the global financial system.