US President Barack Obama, opening two days of high-level talks with China, said the discussions could lay the groundwork for a new era of “sustained co-operation, not confrontation” in a relationship likely to shape the 21st century.

The United States and China pledged $20bn (€15.6bn) to help finance trade amid a global credit crisis today as they wrapped up high-level talks marked by a Chinese appeal to Washington to stabilise its economy.

Asian stock markets slipped in early trade today, tracking Wall Street lower as investors cashed in profits following a two-day rally.

EU trade commissioner Peter Mandelson and China’s commerce minister called today for closer trade ties but announced no breakthroughs in talks on import controls and other disputes.

As Beijing today prepared to open a hastily-built 1,000-bed SARS hospital, villages around China’s capital were blocking roads in hopes of keeping out the virus.

BEIJING’S SARS outbreak remains severe and hospitals handling the disease don’t have room for all suspected cases, the city’s new mayor said yesterday, adding that the first 195 patients were being moved into a new isolation unit.

Beijing’s new mayor denied speculation that the capital was about to be sealed off, but admitted today that its hospitals were overloaded with SARS cases as China and Hong Kong reported 18 new deaths.

Beijing’s new mayor today said the Sars outbreak “remains severe” in the Chinese capital and hospitals designated to handle the disease do not have enough beds for all suspected cases.

Beijing’s new mayor has been fired after the Chinese capital announced a nearly tenfold increase in cases of the deadly Sars disease, boosting its total from 37 to 346.