World leaders and finance chiefs on Thursday pushed Europe to quell its debt crisis and big emerging economies said they might provide more money to help stop the chaos from spreading.

As finance ministers and central bankers gathered for talks amid growing concern about sharply slowing growth and plunging stock markets, the leaders of seven big economies stressed the need to contain the euro zone crisis.

Euro zone governments and institutions must act swiftly to resolve the euro crisis and all European economies must confront the debt overhang to prevent contagion to the wider global economy, the leaders of Australia, Canada, Indonesia, Britain, Mexico, South Africa and South Korea wrote in an open letter to France, chair of the Group of 20 leading economies.

Separately, officials from the so-called BRICS countries, including heavyweights China, Brazil and India, said they would consider giving more funds to the International Monetary Fund to boost global stability.

But India issued a reminder that developing countries were not in a position to bail out richer economies.

We represent a group of countries where there is (an) enormous amount of demand for resources at home for poverty reduction, Reserve Bank of India Governor Duvvuri Subbarao said at a joint BRICS news conference in Washington.

The euro area crisis, centered on a fiscal meltdown in Greece, has put a strain on the IMF's resources. With key economies teetering on the edge of recession, more countries could seek emergency loans, quickly depleting its capital.

Finance ministers and central bankers from the G20 met over dinner in Washington to discuss the crisis. A G20 source said they would issue a communique after the meeting, but it would contain no surprises. Officials had previously said there would be no communique.

The news a G20 statement would be issued helped lift the euro briefly in Asia morning trade. French Finance Minister Francois Baroin was also due to brief the press.

An internal IMF staff report obtained by Reuters last week showed that the fund could comfortably lend out another $390 billion without endangering its balance sheet. But in a worst-case scenario, it may face demands for $840 billion.

China's central bank chief Zhou Xiaochuan said any talks about giving the IMF more funds should include other countries beyond the BRICS such as the Group of Seven rich nations.

Highlighting the growing role of the BRICS in the world, Zhou said major emerging markets should boost domestic demand to take up some of the slack caused by weakness in the United States and Europe.

In today's crisis period, internal demand of each economy is important, and we should find a way to enlarge internal demand in our economy, he said.

But Zhou made no mention of repeated U.S. calls for Beijing to let its yuan currency rise faster.

As stock prices around the world fell on fears of a new economic slump on Thursday, U.S. Treasury Secretary Timothy Geithner voiced optimism that Europe would devote more of its own resources to backstop euro area governments and banks under stress.

I am very confident they're going to move in the direction of expanding (their) effective financial capacity, he said. They're just trying to figure out how to get there in a way that is politically attractive.

Europeans showed interest but appeared in no rush. Baroin said giving more clout to Europe's new bailout mechanism, the European Financial Stability Fund, could be done but was not top of his agenda.

The main issue (for the euro zone) is reducing (budget) deficits as quickly as possible. Leveraging the EFSF is not a priority for now, (but) we could eventually consider how to leverage it to give it more systemic firepower.


In Frankfurt, a European Central Bank study warned the entire euro currency project was now in peril.

The study, perhaps the most stern warning about the euro's future from a central banker, was a parting shot from ECB chief economist Juergen Stark, who resigned this month after opposing the bank's purchases of troubled countries' bonds.

Greatly increased fiscal imbalances in the euro area as a whole and the dire situation in individual member countries risk undermining stability, growth and employment, as well as the sustainability of (Europe's Economic and Monetary Union) itself, said the research paper, which was published by the ECB but not endorsed by it.

Financial markets have shown disappointment that officials have been unable to come up with a coordinated game plan to arrest Europe's woes. World stocks plunged on Thursday as investors worried about the grim global growth outlook, including data pointing to a slowdown in China, one of the world's key economic engines.

European stocks fell more than 4.5 percent and, in the United States, the Dow Jones industrial average closed down about 3.5 percent.

Investors flooded into the safe haven of U.S. Treasury debt, pushing yields to new lows a day after the Federal Reserve, warning the U.S. economy faced significant risks, announced a new plan to keep borrowing costs low.

We're not quite staring down the barrel (but) the problems in the euro zone are now so big that they have begun to threaten the stability of the world economy, British Prime Minister David Cameron told the Canadian Parliament in Ottawa.

The European Union's monetary affairs commissioner, Olli Rehn, did not rule out the possibility of a Greek debt restructuring but vowed European leaders would not allow an uncontrolled default nor Greece leaving the euro zone.

In Athens, Prime Minister George Papandreou said further austerity measures were vital to Greece, even as workers striking in protest shut down the country's transport system.

There is no other path, he said.

(Additional reporting by David Ljunggren in Ottawa, Regan Doherty in Qatar, Daniel Flynn, Jan Strupczewski, Rachelle Younglai and Lesley Wroughton in Washington, Lionel Laurent and Julien Ponthus in Paris, Ross Finley in London, Lefteris Papadimas in Athens, Martin Santa in Frankfurt; Writing by David Lawder; Editing by Neil Stempleman and Chizu Nomiyama)