G7 seeks to steady financial markets

Group of Seven finance ministers injected a dose of confidence in global economic recovery at a weekend meeting where they sought to steady wobbly financial markets.

"Since we last met, growth in our economies has strengthened and should continue to consolidate throughout the year," they said in a statement issued after meetings that lasted less than 24 hours. "We are thus confident about our future prospects."

As the ministers lunched in a hotel after the gathering in the busy port of Halifax, Canada, police armed with riot shields fired tear gas at about 200 anti-globalisation protesters who toppled a first row of waist-high metal barriers.

There were at least two arrests but no reports of injuries, police said. Inside finance chiefs were confronted by a descending dollar and tumbling global stock markets, where investors have been spooked by a slew of corporate scandals.

"There is an unbelievable movement... in the market without what I believe to be substantive information," US Treasury Secretary Mr Paul O'Neill told reporters after the meeting. "The important thing is the fundamentals of what is going on in the real economy, which I continue to believe are quite good," he said. "Eventually, the markets will reflect the underlying strength in the economy."

Concerns had been raised that sliding global stock markets could ram into a world economy still shaking off fears triggered by the September 11th terrorist attacks.

The financial chiefs managed to bridge deep differences on how to deliver aid to the poorest countries, especially Africa, which has become a badge of good intentions for the G7 ministers.

Policymakers announced an agreement to distribute 18-21 per cent of World Bank aid in the form of grants instead of loans, ending a months-long dispute that split the United States and Europe.

The deal unlocks the way to replenishing the dwindling funds of a World Bank unit for the poorest countries, with the G7 and other donors now expected to deliver $22 billion (€23 billion) to be disbursed over three years.

However, activists were unimpressed. The UK aid group Oxfam chided ministers for failing to meet its challenge to produce an extra $4 billion a year to fulfill a two-year-old internationally agreed goal of providing primary school education for all children by 2015.

The weekend meeting set the scene for a summit of leaders from the G7 - Britain, Canada, France, Germany, Italy, Japan and the United States - plus Russia, collectively the Group of Eight. The G8 summit is to be held from June 26th and 27th in Kananaskis, in the Canadian province of Alberta. - (AFP)