Obama vows global action on growing economic crisis

 US president-elect Barack Obama has pledged to work with global leaders to stem the ever-widening financial crisis, as Washington and Britain moved to shore up their ailing economies.

"The reality is that the economic crisis we face is no longer just an American crisis, it is a global crisis -- and we will need to reach out to countries around the world to craft a global response," Obama said Monday, unveiling his economic team for his administration, which begins January 20.

Obama confirmed the well-traveled Timothy Geithner as his nominee for Treasury secretary, and the internationally respected former Treasury boss Larry Summers as his top economic adviser in the White House.

Underlining the ongoing woes of the financial sector, Citigroup , once the world's biggest banking group, was given a new 20-billion-dollar capital injection lifeline from the US government.

The rescue plan announced late Sunday also saw the government offer guarantees for 306 billion dollars of Citigroup debt, as well as injecting more capital into the struggling bank after a previous 25-billion-dollar infusion.

Citigroup's shares had slumped last week over fears it could follow other banks into the financial void, but surged when trading opened on Monday.

The bailout plan sparked a frenzy on the markets, with Wall Street and European stock markets soaring as investors cheered the news.

The Dow Jones Industrial Average lept 4.93 percent to close at 8,443.39 while the Nasdaq composite soared 6.33 percent to 1,472.02.

In Britain , finance minister Alistair Darling, who forecast a sharp economic contraction in 2009, launched a tax and spending plan worth 20 billion pounds (23 billion euros, 30 billion dollars).

"We need action now to boost economic activity ... to help us emerge quicker and emerge stronger from these difficult times," Darling told lawmakers.

Britain's FTSE index of leading shares rejoiced in the news and jumped 9.84 percent as a stimulus package added to the early momentum on the Citigroup announcement.

An increasing number of countries are devising stimulus packages to boost their businesses and consumers.

Obama may unveil more details of a proposed planned stimulus package at another press conference on Tuesday, with Democrats vowing to draw it up as soon as possible.

The package, should be approved "right now," he said, adding it should be the first order of business for the new Congress in January.

"I think the most important thing to recognize is that we have a consensus, which is rare, between conservative economists and liberal economists, that we need a big stimulus package that will jolt the economy back into shape."

Outgoing US President George W. Bush again pledged that his administration was ready to take all necessary measures to shore up the struggling US economy.

"This is a tough situation for America. We'll recover from it. The first step to recovery is to safeguard our financial system," Bush said after late night talks with Treasury Secretary Henry Paulson.

"And if need be, we're going to make these kind of decisions to safeguard our financial system in the future," Bush told reporters.

A top New York official warned as many as 225,000 jobs could be lost in New York city and state due to the Wall Street crisis.

The US Treasury also announced it was extending a temporary guarantee program for money market funds announced in September until April 30, "to support ongoing stability in this market."

In Asian trading on Tuesday, Hong Kong shares opened 4.3 percent higher, Philippine share prices opened 3.6 percent up, Singapore shares were 3.06 percent higher in early trade, and Japan's Nikkei stock index soared 4.24 percent by the lunch, all reacting to the strong Wall Street rallly.

In Europe, German Chancellor Angela Merkel warned the European Union Monday not to rush out its multibillion-euro package to steer the 27-nation bloc through the global slowdown.

Following talks with French President Nicolas Sarkozy, Merkel also said France and Germany would not follow Britain's lead by slashing value-added tax (VAT) to stimulate spending as a way to fight the economic downturn.

The European Commission was set to unveil proposals for a Europe-wide government spending and tax relief plan on Wednesday.

The CAC 40 index in Paris surged 10.09 percent, its second biggest ever single day gain, and in Frankfurt the DAX advanced 10.34 percent.

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