UNITED States President George W. Bush, looking for answers to a global economic emergency with just three months left in office, will host an international summit to discuss ways to fix the world financial system.

'We will work to strengthen and modernise our nations' financial systems so we can help ensure that this crisis doesn't happen again,' he said over the weekend, following meetings with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso.

There was no mention of when the summit will take place but it is anticipated to be held shortly after the US presidential election on Nov 4.

A joint statement from the three leaders said other world leaders would be contacted beginning this week, and there would also be subsequent summits, 'designed to implement agreement on specific steps'.

Japan, which chairs the Group of Eight rich nations, declared its backing for the summits, but its finance minister warned they would only be worthwhile if they produced concrete results.

'If a summit were to be held, it should come up with a strong action plan or a decision,' Finance Minister Shoichi Nakagawa said yesterday, adding, 'I think the Prime Minister is making preparations based on this understanding.'

But there are already signs of different visions for the summits.

While President Bush has backed the steps European nations have taken to fix the financial markets and is willing to listen to a range of ideas from both developed and developing nations, he has not signed on to the more ambitious, broad-stroke reforms that some European leaders have in mind to avoid a repeat of the market crisis that is rippling around the globe.

President Sarkozy has floated the idea of reforming rating agencies and even exploring the future of currency systems.

British Prime Minister Gordon Brown, who engineered a British bank bailout that inspired other European rescues, is proposing radical changes to the global capitalist system, including a cross-border mechanism to monitor the world's 30 biggest financial institutions.

Mr Bush however said that any plan to rethink financial mechanisms should 'preserve the foundations of democratic capitalism' and include 'a commitment to free markets, free enterprise and free trade'.

President Sarkozy, while agreeing with President Bush's view that reforms not challenge the foundations of market economics, said: 'We cannot continue along the same lines because the same problems will trigger the same disasters.'

He said hedge funds and tax havens cannot continue to operate as they have in the past; financial institutions cannot continue without supervisory control.

Meanwhile, China's Xinhua news agency yesterday blamed US consumers for fuelling the crisis with reckless habits of spending on credit. It said in an opinion piece from New York: 'Many people think that you cannot de-link the consumer concept of 'eating the corn while it is still on the stalk' and this financial crisis which has a deep impact.'

South Korea became the latest country to join worldwide efforts to shore up banks and markets. The authorities in Seoul yesterday pledged US$130 billion (S$192 billion) in state guarantees for and capital injections into financial institutions.

In the Middle East, the United Arab Emirates was reported to be planning to inject 70 billion dirhams (S$28 billion) into long-term bank deposits, and Oman's Chamber of Commerce and Industry called for a cash injection into banks for financing.

In Britain, Finance Minister Alistair Darling said the government would have to borrow more to fund public spending to generate growth and employment.

'This is a time when you have to support the economy,' he told the Sunday Telegraph. 'We can allow borrowing to rise.'

Dutch financial group ING is in talks with the Dutch government about a state-backed cash injection estimated to be worth up to ¥9 billion (S$17.9 billion), Britain's Sunday Times newspaper said.

Governments around the world have so far pledged about US$3.2 trillion - about the same as the economic output of Germany - in schemes that guarantee bank deposits, bank-to-bank lending, and taking stakes in banks to shore up their capital.

ASSOCIATED PRESS, REUTERS