BEIJING (Reuters) - Even as markets tumbled around them, Asian and European leaders expressed confidence on Friday that they could overcome the deepest global financial crisis in more than 70 years.

French President Nicolas Sarkozy speaks during the opening ceremony for the 7th Asia Europe Meeting (ASEM) held in Beijing October 24, 2008. REUTERS/Ng Han Guan/Pool

Opening a two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries, President Hu Jintao urged a rapid response to the turmoil, which he said increased the challenges confronting the world’s fourth-largest economy.

“For China’s economy to maintain a healthy state is itself an important contribution to global financial stability and economic development,” Hu said.

Chinese Premier Wen Jiabao said the crisis was generating “a severe shock to global economic growth.”

The European Union wants Asia to play a full part at a crisis summit that U.S. President George W. Bush is convening next month to help shape global financial reforms and tackle the economic imbalances at the root of the crisis.

German Chancellor Angela Merkel said reforms should focus on more transparency in markets, new compensation schemes for financial institutions, stricter supervision and closer international cooperation.

“This is about no less and no more than the creation of a new financial constitution,” she said.

Merkel said it was too early to say how long the crisis would last. As if to reinforce the point, financial markets went into fresh convulsions on Friday.

European stocks shed 9 percent after shares in Japan slumped nearly 10 percent. The yen rose at dizzying speed, while the pound, the euro and oil prices sank like a stone.

ENTERING THE 21ST CENTURY

President Nicolas Sarkozy of France, which currently holds the rotating EU presidency, said he hoped Asia and Europe could forge a common front at next month’s talks in Washington.

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“Europe would like Asia to support our efforts, and we would like to make sure that on November 15 we can face the world together and say that the causes of this unprecedented crisis will never be allowed to happen again.

“If we manage to make sure that this is done, maybe this crisis will go down in history as the day on which we managed to enter the 21st century and start resolving this crisis,” he said.

Welcoming Bush’s plan for a summit, ASEM leaders committed themselves to comprehensive reform of the international monetary and financial systems. Better supervision and regulation of all financial actors was a particular priority.

“Leaders believed that authorities of all countries should demonstrate vision and resolution and take firm, decisive and effective measures in a responsible and timely manner to rise to the challenge of the financial crisis,” said the final draft communique, which was obtained by Reuters.

“Through such concerted efforts, leaders expressed full confidence that the crisis could be overcome,” it said.

FINANCIAL ORDER

Europe is looking to Beijing in particular to give a lead. With more than $2 trillion in reserves and the fastest-growing major economy, China is seen by many outsiders as tomorrow’s economic superpower.

But China’s leaders are more cautious about assuming greater global responsibility. They stress China is still a developing country and their focus is on raising living standards at home.

Still, Merkel said China was receptive to taking part an international drive for new rules financial rules of the road.

“There’s support over here for the idea that we need order in financial markets and a financial market constitution with international character,” said Merkel, who earlier met Hu.

In a step they billed as contributing to regional stability, the ASEAN group of Southeast Asian states agreed with Japan, China and South Korea to upgrade a long-established $80 billion web of currency swap lines among central banks across Asia.

The purpose is to allow a country facing a foreign exchange crisis to rapidly call up financial firepower by swapping its currency for those of its neighbors, or for dollars.

Asia has fared better during the latest bout of turbulence on global markets. ASEAN’s leaders expressed confidence that the group’s financial sector remained “solid and sound.”

“Nevertheless, precautionary actions are needed to send a clear and unequivocal signal that ASEAN is resolute and better prepared than 10 years ago when the financial crisis hit the region in 1997,” ASEAN said after its own pre-summit talks.

ASEAN groups Cambodia, Malaysia, Indonesia, Singapore, Vietnam, Philippines, Laos, Thailand, Myanmar and Brunei.

Not all the talk over the two days will be financial. The ASEM meeting will also discuss food security and global warming.

Polish Prime Minister Donald Tusk said he wanted countries to reaffirm their commitment to achieving progress in talks on climate change and not use the global credit crisis as an excuse.

“If we give up this process, that could bring disastrous consequences, especially for poor countries,” he told reporters.