NEW YORK: President George W. Bush holds talks on Saturday with European leaders hoping to pave the way for an overhaul of the global financial regulatory system, amid growing evidence the world is sliding toward recession.
The White House has played down expectations for the meeting at the Camp David presidential retreat between French President Nicolas Sarkozy, European Commission President Jose Manuel Barroso, and Bush.
Economic gloom was foreshadowed by U.S. consumer confidence and new-home construction plummeting in recent weeks, with U.S. stock indexes ending down on Friday despite better than expected earnings in the technology sector.
Interbank lending rates fell this week for the first time since July, providing some hope that the worst of the global banking crisis may have passed, but stock markets around the world remained volatile, weighed down by recession fears.
European shares ended higher and oil rose $2 a barrel, but a rise in the U.S. dollar was a sign of investors seeking safety.
Among benchmark U.S. stock indexes the Dow Jones Industrial Average ended down 127 points or 1.41 percent after trading in a 560 point range. The S&P500 index ended down 0.62 percent.
Adding to the gloom about the U.S. economy, a senior Federal Reserve policy maker said the jump in the jobless rate suggested the economy would probably slip into recession.
Intervention by governments in the United States and Europe in the past week needed time to work, Bush said on Friday.
"Our European partners are taking bold steps. They show the world that we're determined to overcome this challenge together. And they have the full support of the United States," Bush said in a speech at the U.S. Chamber of Commerce.
Bush, who leaves office in January after a November 4 election, said he would continue "close consultations" with European leaders at the meeting on Saturday afternoon.
But he did not specifically mention calls by European leaders to reform the financial system that the world has been operating under since 1944, and White House spokeswoman Dana Perino said the U.S. focus was on the immediate crisis.
"I think the most important thing we can do is make sure that we stop the bleeding here before we move on to the next project," she told reporters.
Barroso and Sarkozy met Canadian Prime Minister Stephen Harper on Friday and agreed on the need for an international summit before the end of the year. Sarkozy said it should include China, India and other non-G8 countries.
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