G20 leaders craft crisis response

A communique drafted for release at a G20 summit in London, obtained by Reuters, signaled that leaders would submit large hedge funds to supervision for the first time and enhance regulation through a new agency and a beefed-up International Monetary Fund.

It included a pledge to deliver "the scale of sustained effort necessary to restore growth" without making any commitments beyond the trillions being spent to stabilize banks, shore up demand and limit job losses.

Keen to secure a confidence-boosting message for voters and frazzled financial markets as the world succumbs to recession, U.S. President Barack Obama said there were no substantive differences with Europe, despite the hardball stances taken by the French and German leaders.

Washington wanted tougher regulation too, he told a news conference on Wednesday with Britain's Gordon Brown, summit host, saying he was at the summit not just to lecture but to listen and to help lead the way out of trouble.

It was not clear whether the flashpoint, which appeared to focus primarily on Sarkozy's demands for blacklisting of tax havens, would be enough to derail a message of unity from the meeting.

The draft communique said tax havens would be identified and sanctions could be deployed.

"The era of banking secrecy is over," it declared.

ONE DEAD AT PROTESTS

Several hundred demonstrators clashed with riot police and smashed bank windows in London's financial center ahead of the summit on Wednesday.