- - Sunday, August 7, 2011

Finance officials from major industrial countries, seeking to calm nervous global markets, pledged Sunday to increase cooperation on attacking economic problems.

The officials from the Group of Seven industrial countries issued a joint statement late Sunday saying they were prepared to take all necessary measures to support financial stability and growth.

“We are committed to addressing the tensions stemming from the current challenges on our fiscal deficits, debt and growth,” the group said.

The G-7 statement came after the group held an emergency conference call to discuss the debt crisis in Europe and market prospects following the announcement of the first-ever downgrade of the credit rating of the U.S. government.

U.S. Treasury Secretary Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke participated in the G-7 call, which also included finance officials from Japan, Germany, France, Britain, Italy and Canada.

The G-7 statement did not specifically address the decision by credit-rating agency Standard & Poor’s to lower the U.S. credit rating a notch from AAA to AA+. But it did praise the agreement approved by Congress last week that raised the country’s borrowing limit and pledged more than $2 trillion in deficit reduction over 10 years.

The statement said the United States had “adopted reforms that will deliver substantial deficit reduction over the medium term.” That was in contrast to the S&P ratings decision, which criticized the U.S. debt agreement as not going far enough.

On Monday, Japan’s finance minister separately said his country would continue investing in U.S. government bonds.

“Confidence in the U.S. bonds is unshaken,” Yoshihiko Noda told Jiji Press news agency, calling U.S. Treasury bonds “an attractive financial product.” Japan is the second-largest holder of US Treasury bonds after China.

As expected, Asian stocks fell in early trading on Monday after the G-7 statement and other weekend efforts to calm financial markets. However, the fall was not as large as might have been expected, and some markets clawed back some of their immediate losses.

The main stock markets in Tokyo and Seoul both opened down 1.40 percent, though both indexes made back some of those losses. Australian stocks fell 1.8 percent, and Hong Kong’s Hang Seng Index opened 2.57 percent lower. China’s Shanghai Composite Index did best of all, losing less than 1 percent upon opening.

Crude-oil prices were sharply lower in Asian trading, with New York’s main contract - light, sweet crude for September delivery - dropping $2.48 to $84.40 a barrel.

The G-7 statement also took note of developments regarding the debt crisis in Europe and said the focus should be on “quick and full implementation of the agreements” that have been reached to deal with countries’ debt burdens.

The G-7 statement also said the group would be alert for any indications of “excess volatility and disorderly movements” in exchange markets.

From combined dispatches

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