Cameron joins G20 leaders in call for co-ordinated action on recession

World stock markets are being pushed to 13-month lows with fears of another global recession and talk of governments stepping in to soothe nerves.

Stockmarkets in Dublin and London opened up slightly this morning, although they have fallen back a little since then.

Last night British Prime Minister David Cameron joined forces with the leaders of five other G20 countries to call for decisive and co-ordinated action from the world's leading nations to help the global economy recover from recession.

An open letter to French and current G20 president Nicolas Sarkozy urged the eurozone countries to act swiftly to resolve the crisis in the region, where Greece remains teetering on the brink of a debt default.

The letter said the global economy needed a swift solution to the euro crisis, while it also called for countries with trade surpluses to boost domestic demand and a global deal to remove trade barriers.

It followed grim warnings about the health of the global economy from both the heads of the World Bank and the International Monetary Fund.

The heads of the IMF, the World Bank, and the US Federal Reserve are in Washington to try to tackle the crisis.

It comes after markets this morning continue to slide in Asia, while the value of the Australian and New Zealand dollar have both plunged in early trading.

Finance officials from the G20 nations are pledging to preserve financial stability, however market experts have said they have yet to come up with a co-ordinated action plan.

Yesterday’s rout was triggered by alarm over the US Federal Reserve’s gloomy view of the economy and its failure to inspire traders with new emergency measures, including a process dubbed Operation Twist.

Wall Street’s Dow Jones Industrial Average finished 3.5% lower last night - meaning it has lost 6% of its value in the last two days – while Hong Kong’s Hang Seng index fell 1.9% after losing nearly 5% the day before.

Traders warned that any rally may prove short-lived until there is a political consensus on how to solve the problems in the euro-zone and in many of the other developed economies.

Chris Weston, a trader at IG Markets, said: “Unfortunately for the market, a lack of political leadership seems to be one of the biggest reasons as to why we can’t make any meaningful inroads into solving this crisis.”

Robert Zoellick, president of the World Bank, said the global economy is now in a “danger zone”.

Global markets had surged in previous days on hopes that the Fed might embark on a third package of quantitative easing, but Operation Twist, designed to keep US interest rates lower for longer, was met with worldwide disappointment.

Poor manufacturing data from China and the eurozone added to the unease and sparked a widespread sell-off of mining stocks on concerns demand for metals may suffer if China and the US stop growing or turn down.

On Wednesday, the US Federal Reserve also warned that there were “significant” risks to the world’s biggest economy.