World leaders called for an urgent overhaul of international financial systems and China demanded stricter regulations in the face of dramatic losses on the markets and a sliding world economy.

"Leaders pledged to undertake effective and comprehensive reform of the international monetary and financial systems," the 40-member Asia Europe Meeting (ASEM) in Beijing said in a statement released late on Sunday.

"They agreed to take quickly appropriate initiatives in this respect, in consultation with all stakeholders and the relevant international financial institutions," the statement said.

China's Premier Wen Jiabao called for more regulation of the world's financial system.

"We need to draw lessons from this crisis," Wen told journalists after the summit wrapped up.

"We need to handle correctly the relationship between financial innovation and regulation. We need financial innovation to serve the economy better, however we need even more financial regulation to ensure financial safety."

He also pledged China would take an active role in a crucial international summit in the United States next month aimed at tackling the global financial meltdown.

"We will take an active part in the upcoming international financial summit to be held in Washington," he said, although he did not say which Chinese leader would attend the November 15 meeting of leaders from 20 industrialised and emerging powers.

As the Asian and European leaders promised wide-ranging and effective reforms, UN Secretary General Ban Ki-Moon called for quick and meaningful change.

"The market and regulatory failures that have led to this (financial) crisis must be addressed as a matter of urgency," a joint statement from the UN summit said.

"We reaffirm the need for meaningful, comprehensive and well-coordinated reform of the international financial system and pledge our support to this end."

Stock markets provided a grim backdrop to the ASEM meeting, plummeting on Friday after a raft of pessimistic corporate and economic news pushed markets into further losses, with Tokyo's dizzying 9.6 per cent slump spilling over to Europe, where London's FTSE plunged 5.0 per cent.

The Dow Jones Industrial Average slumped 312.30 points (3.59 per cent) to close at 8,378.95, capping a week when the US blue-chip index dropped more than five per cent.

The Saudi stock market, the largest in the Arab world, opened trading with a sharp drop of more than nine per cent to its lowest point in four years.

Iceland's government said it had asked for 1.58 billion euros ($A3.05 billion) from the International Monetary Fund, the first Western country to do so since 1976, after the collapse of its banking sector.

The IMF said it had tentatively agreed to the loan and announced it had set aside more cash to rescue stricken nations.

French auto giants PSA Peugeot-Citroen and Renault ordered huge production cuts, while Japan's electronics giant Sony and Europe's biggest airline Air France-KLM issued profits warnings.

In Britain, official figures confirmed the country was about to enter a recession while Turkey's central bank took action to strengthen bank liquidity and prop up its slumping currency.

Chrysler LLC, the number three US automaker, said it would cut up to 5,000 white-collar jobs by the end of the year as prospects in the sector grow dimmer.

New figures showed industrial confidence in both France and Italy had fallen to the lowest level since 1993. In Spain, the unemployment rate jumped to 11.33 per cent - the highest in more than four years.

Britain's economy shrank by 0.5 per cent in the three months to September compared with the previous quarter, official figures showed, marking the first contraction since 1992.

German Finance Minister Peer Steinbrueck predicted the financial crisis would last until late 2009 in an interview to be published on Sunday.

"The risk of collapse is far from over. It would be wrong to lift the alarm," he told the Bild am Sonntag weekly.

He said the 480 billion euros ($A927 billion) rescue package for banks approved last week would "certainly be needed" through next year and that it would take until between 2010 and 2013 for Germany to determine the real costs of the plan.

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