LONDON, England (AP) -- Presenting a united front after meeting to discuss how to stabilize international financial markets, European leaders said Tuesday there is a pressing need for more transparency and a better early warning system for the global economy.

 

British Prime Minister Gordon Brown, flanked by French President Nicolas Sarkozy, German Chancellor Angela Merkel, Italian Prime Minister Romano Prodi and European Commission President Jose Barroso, told reporters the meeting was "triggered by the subprime crisis" in the U.S. mortgage market.

Though the resulting turbulence has spread to other financial markets, including Europe's, "We are agreed that the fundamentals of the European economies remain sound," Brown said.

Still, he added, "Authorities need to cooperate and exchange information effectively within the European Union and internationally to prevent and manage crises and contagion."

He said the group is calling for "improvement in the information content of credit ratings" as well as greater transparency.

That transparency should include "prompt and full disclosure of the losses banks and other financial institutions face," he said.

Should financial institutions fail to make those changes on their own, he warned, "We stand ready to take regulatory action."

In addition, he said, "We need a better early warning system for the global economy and that warning should have the force of authority to ensure that their warnings are acted upon."

Brown called on the International Monetary Fund and the Financial Stability Forum to spell out their plans at the next IMF meeting.

The European leaders said they plan to discuss the same issues next week in Tokyo at the meeting of the G8 finance ministers.

"What we are calling for is enhanced transparency of the world financial system," said Sarkozy. "The warning we are issuing to credit-rating agencies has to be heeded."

He noted that the lessons from the sub-prime mortgage crisis in the United States apply equally to last week's report of a $7 billion loss attributed to a rogue trader at a Paris bank.

"If we do not want a return to protectionism then we have to ensure transparency," he said.

But Prodi said his country's reorganization of its financial system in recent years has left it in a strong position.

He said Italian banks tend to leverage their assets less than other world financial institutions, and have little involvement in complex, sometimes high-risk financial instruments such as derivatives.

In addition, he said, "I can be proud to say that the budget is very sound. We are lower than 2 percent deficit."

Even if other countries suffer, he predicted, "I think that the (Italian) economy will not absolutely suffer."

Source: CNN.com/europe