European Union Summit: 3 Countries Call For Financial Market Stability

The European Union should play a leading role identifying and responding to risks in global financial markets, the U.K., France and Germany said Friday.Recent financial-market turmoil, which stemmed from bad subprime mortgages in the U.S., showed that some investment instruments are "insufficiently transparent" and that current oversight is inadequate, U.K. Prime Minister Gordon Brown, French President Nicolas Sarkozy and German Chancellor Angela Merkel said in a joint statement.The leaders asked E.U. finance ministers to study whether new regulations are needed, particularly for structured financial products, banks' off-balance sheet risks and ratings agencies.The E.U.'s 27 heads of state in the early hours of Friday morning ratified a new treaty aimed at streamlining the bloc's bureaucracy and boosting cooperation on everything from foreign affairs to policing. Their talks then turned to worries about Europe's economy. The strong euro is beginning to tax exports, oil prices are at a record high and recent financial-market turmoil isweakening investors' confidence."Recent financial-market turbulence will affect growth in the world economy, particularly in the G7 countries," Brown told a news conference.He noted that the U.K. and other members of the Group of Seven leading industrial nations will discuss global economic issues at a meeting in Washington, D.C. Friday.A key concern for the 13 countries using the euro has been the currency's climb against the U.S. dollar and Japanese yen. Sarkozy had been a solitary voice calling for the European Central Bank to cut interest rates to reverse the euro's ascent, but after a meeting of euro-zone finance ministers last week, countries agreed to cooperatively pressure China to untether the yuan andurge the U.S. to pursue a stronger dollar. The euro hovered above $1.43 Friday, near a record high."Not everyone agrees that the euro is overvalued, but everyone agrees that some other currencies are undervalued," Sarkozy told a news conference Friday.Sarkozy and other E.U. leaders are worried about the bloc's growing trade deficit with China. E.U. data published earlier Thursday showed the trade deficit with China grew to EUR86.1 billion in the first seven months of this year, compared with EUR68.9 billion in the corresponding period last year