Markets slide despite G20 pledge

The Group of 20 major economies have vowed to mount a powerful response to the challenges facing the world economy after European markets spun out of control on Thursday. But the pledge failed to sooth financial markets which continued to fall in early trading on Friday. 

Reuters/Yuri Gripas

In an unexpected statement, G20 finance ministers and central bankers pledged to work together to support growth and implement “credible fiscal consolidation plans.”

Details of the action plan will be prepared for the G20 summit in Cannes on 3-4 November.

At the opening of annual meeting of the World Bank and the IMF in Washington, World Bank head Robert Zoellick called on Europe, Japan and the United States to “address their big economic problems before they become bigger problems for the rest of the world.

His comments were echoed by IMF chief Christine Lagarde who said debt burdens and capital-weak banks could “suffocate” any economic recovery.

Asian markets plummeted for the second straight day on Friday with Manila plunging 5.13 per cent and Hong Kong down 1.67 per cent.

Despite an early rally by European markets, both London and Paris started to drop soon after the opening of trading.

Meanwhile Moody's credit rating agency has issued two credit downgrades in the crisis-hit eurozone on Friday, marking down leading Greek banks by two notches and Slovenian debt by one notch.

Moody's Investors Service also warned of an increased prospect that the Greek economy will worsen, and said that private holders of Greek debt, meaning banks, might suffer further losses.