The European Union was set to back an International Monetary Fund call for $500 billion to fight the financial crisis today as world stocks sank towards 14 year lows in a broad-based sell-off.
Economic gloom spread from Asia to Europe as Japan recorded its largest current-account deficit and US stocks fell at the outset on persistent lack of confidence in steps to shore up ailing banks before edging into positive territory.
Billionaire investor Warren Buffett said the US economy had "fallen off a cliff" and warned of inflation risks from any rebound, although European Central Bank President Jean-Claude Trichet said there were signs a turning point may be near.
A key US policymaker said a coordinated global effort was needed to stimulate demand and drag the world out of recession. The European Investment bank promised speedy approval for extra loans, notably for the car sector, and more bond issues.
The IMF, which acknowledged last week its warnings before the crisis were insufficient, has called for a doubling of its funds as a growing number of countries turn to it for help, ahead of a G20 summit in London next month.
An EU draft document obtained by Reuters, which is set to be approved by EU ministers on Tuesday, said: "It is essential that the IMF has appropriate financial means to assist countries particularly affected by the current crisis."
Reuters