RIYADH (AFP) — British Prime Minister Gordon Brown arrived in Saudi Arabia Saturday seeking financial support to calm the world economic storm as India became the latest country to cut interest rates to boost growth.
In a further sign that the financial crisis centred in the United States and Europe is affecting activity in emerging nations, India's central bank cut its key short-term lending rate Saturday by 50 basis points to 7.50 percent.
The Confederation of India Industry welcomed the move by the Reserve Bank of India as "supportive of growth."
China's President Hu Jintao meanwhile called for a boost in domestic demand to maintain the nation's economic growth in the face of the global financial crisis, state media reported Saturday.
Hu said that governments at all levels should "strive to expand domestic demand, especially consumer demand," as he visited farmers in the northern province of Shaanxi, the official People's Daily newspaper reported.
Brown's visit was the first in a four-day tour of oil-rich Gulf states during which he will try to persuade leaders to give extra funds to countries hit by the economic crisis.
He wants the International Monetary Fund's 250-billion-dollar (195-billion-euro) bailout fund for the worst affected countries to be extended to prevent "contagion" spreading to other nations.
He has already called for the Gulf states and China to step up and be among the biggest donors to an expanded scheme.
"The Saudis and other countries in the Gulf states are very important, they are the countries with great revenues and oil wealth," Brown said just before leaving London.
"Everybody has got a part to play in solving the world downturn. I think the oil-rich states will want to play their part."
Earlier this week Brown said it is the oil-rich countries and others "who are going to be the biggest contributors to this fund."
Accompanying Brown were Peter Mandelson, the former EU trade commissioner, now Britain's Business Minister, Energy Secretary Ed Miliband and 27 leading figures from British business.
Despite Britain's strong historic and trade links with the Gulf states, he could have difficulty winning them over.
The price of oil, their main economic asset, fell below 60 dollars a barrel this week from record highs of nearly 150 dollars in July on fears of falling demand because of the slowdown.
And last week Brown clashed with the leading oil producing countries over their emergency cut in production, which was a bid to halt the slide.
But the Organization of Petroleum Exporting Countries (OPEC) has said it sees no reason why it should bail out a crisis which originated in the United States.
The IMF is set to bail out Hungary, Ukraine and Iceland, while Pakistan is reportedly poised to apply for IMF assistance over its balance of payments crisis.
In Iceland, where the crisis has pushed the country to the brink of bankruptcy, some 1,000 people demonstrated Saturday to call for the resignation of government officials and central bank chiefs.
Earlier this week, central banks from the United States to Japan lowered borrowing costs in a bid to halt the financial meltdown.
Speculation is growing that the European Central Bank and the Bank of England will follow suit, with fresh rate cuts next week.
Leaders of the G20 industrialised and emerging-market countries will meet in Washington on November 15 to discuss restructuring of the world financial system, including the IMF.
In preparation for the meeting and for a Russia-EU summit next month, Russian President Dmitry Medvedev and French President Nicolas Sarkozy spoke by phone Saturday, the Kremlin said.
They exchanged views on "effective measures to address the world financial crisis", the statement said.
Britain also confirmed Saturday that it was in talks with a Scottish businessman over a possible rival bid for HBOS, the British banking group hit hard by the subprime crisis.
The announcement came a day after Business Secretary Peter Mandelson cleared the takeover of HBOS by rival Lloyds TSB despite competition concerns.
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