BEIJING - EUROPEAN and Asian leaders pledged united and bold action in combating the unprecedented challenges posed by the global economic crisis, as a major regional summit got under way here on Friday.

At the opening of the two-day gathering, Chinese Premier Wen Jiabao made it clear Asia had heard the calls from Europe to work together in tackling the worst financial turmoil since the Great Depression of the 1930s.

'Overcoming the crisis requires global action and a joint response,' Mr Wen told the leaders of more than 40 nations during the Asia Europe summit's first official meeting.

'Asia and Europe are important forces in maintaining financial stability and promoting economic growth. We should join hands to show the world our confidence.'

In the first major coordinated Asian response to the turmoil, China, South Korea, Japan and 10 Southeast Asian Nations pledged to create an 80-billion-dollar (S$125.5 billion) fund that those countries could draw upon to fight off currency speculators.

But amid a seemingly never-ending stream of bad news about economies around the world punctuated by another horror day on global stock markets, Mr Wen and other leaders spoke ominously about the turmoil.

'The spread of the worsening international financial crisis has seriously affected international financial stability and world economic growth,' Mr Wen said in opening the summit.

In his opening remarks to the Asem summit, French President Nicolas Sarkozy called on Asia to support Europe at a crucial economic meeting next month in the United States where leaders will discuss ways to end the turmoil.

'When it comes to the Washington summit on November 15, Europe is going to present a united front and we will submit well-considered proposals developed together,' Mr Sarkozy said.

'Europe would like Asia to support that effort, so that together on November 15 we can tell the whole world that the causes of this unprecedented crisis will never happen again.'

Mr Sarkozy, whose country currently holds the rotating presidency of the European Union, is seeking to overhaul the Bretton Woods system that has governed international finance since the end of World War II.

But the United States has been more cautious in its approach, stressing the importance of preserving the commitment to free markets, free enterprise and free trade.

European Commission President Jose Manuel Barroso told the ASEM opening that the world had no choice but to unite.

'In the globalised financial market of today, we all need to be involved. Europe, Asia and the US and other financial partners need to work together to define and agree responses to the regulatory changes,' he said.

He also warned against protectionism.

'We cannot meet these challenges by closing the door and simply looking after our own house. We have all benefited from trade and an open business environment,' he said.

The most concrete development of the day was the agreement by China, Japan, South Korea and the 10 Southeast Asian nations on the Asian pool of foreign exchange reserves.

The 80-billion-dollar (S$125.5 billion) war chest, initially devised earlier this year, aims to save nations' currencies if need be, allowing them to dip into the pool of funds to fend off speculators.

'We plan with our East Asia dialogue partners to launch (the fund) as soon as possible,' said Sultan Hassanal Bolkiah, leader of Asean member Brunei.

The 80-billion-dollar fund would be created by the end of June next year, and be accompanied by an independent regional financial market surveillance organisation, according to South Korean President Lee Myung-Bak's spokesman.

However, no other party involved gave a firm timeline for when the fund would definitely be created.

Before Friday, Asian governments had mostly limited their intervention to cutting interest rates, guaranteeing bank deposits and injecting money into the credit markets - without the kind of coordinated action taken by Europe. -- AFP