Global finance chiefs vow 'all necessary measures'

World financial leaderssaid Sundaythey will act together for financial stability, as the European Central Bank announceda plan tobuy Italian and Spanish bonds to stemmarket turmoil.

Following emergency talks on the debt crises in Europe and the U.S., finance ministers and central bank chiefs from the Group of Seven countries said in a statement they would take "all necessary measures to support financial stability" in the face of fears over the solvency of the United States and several Europeangovernments.

The statement was timed to come out before stock markets opened in Asia and appeared designed to try to soothe investor concerns following last week's market havoc, which culminated in the downgrading of the U.S.'s debt rating Friday evening by rating agency Standard and Poor's.

However, it did not stop the losses. Tokyo's Nikkei index was down 1.3 per centtwo hours into Monday's trading, while Singapore's Straits Times indexwas down more thanthree per cent and the Hang Seng in Hong Kong shed 2.8 per cent.

U.S. stock index futures, aharbinger of where stocks will likely open Monday morning, were down nearly two per cent as well.

The G7 statement also took markets to task for thepanic overSpain's and Italy's national debts.Due to concerns they could default on their loans, the yield rate on10-year government bonds in both countrieshas passed six per cent,the same general territory that drove borrowing costs so highfor Greece, Ireland and Portugal that they required financialbailouts in the last year.

The G7 statement said "no change in fundamentals warrants the recent financial tensions faced by Spain and Italy."

To try to shore up Spain's and Italy's fiscal positions, the Frankfurt-based European Central Bank announced Sunday it was ready to implementa bond-buyingprogram, a move financial markets had been looking for as apossible way to prevent the eurozone debt crisis from widening.

Essentially,the ECB willbuy bonds from Italy and Spain to lower their yields and the countries' borrowing costs, and in the hopes of shoring up the euro.

Italy and Spain are the eurozone's third and fourth biggest economies.

"This program has been designed to help restore abettertransmission of our monetary policy decisions, taking account of dysfunctional market segments," the ECB statement released late Sunday said.

Japan hints at more intervention

Elsewhere,delegates from the Group of 20 advanced and emerging economies talked by telephoneabout proposals to minimize market shocks, South Korea's central bank said.

And Japanese senior vice finance minister Fumihiko Igarashi hinted that Tokyo would intervene again in the currency market if excessive fluctuations continue. It acted Thursday to weaken the yen and protect Japan's recovery from an earthquake and tsunami in March.

The weekend emergency talks were lined upin response tothe expectednosedive on financial marketsMonday in light of Standard and Poor's move to lower the U.S.'s credit rating and the intensifying debt problems in Europe. Friday evening,S&P announced it was cutting the U.S. government's ratingfor the first time from top-tier triple-A to AA-plus, the second-highest grade.

S&P said thedeal reached last week in Congressto trim trillions in federal spending and raise the government's borrowing limit could get jammed up in political bickering and not ultimately relieve thecountry'smounting debt problem.Officials at theU.S. Treasury fired back, saying the rating agencywas letting political considerations get in the way of financial analysis.

Amid theupheaval, Treasury Secretary Timothy Geithner, who had planned to quit his post oncethe borrowing limit was successfully hoisted, decided to stay on at President Barack Obama's urging.

Canadian Finance Minister Jim Flahertyhas insisted Canada is "well-positioned"to face economic uncertainty but also cautioned the country'seconomy "is not an island" and could eventually be affected by the global debt troubles. Canada is part of the G7, along withthe United States,Britain, France, Germany, Japan and Italy, which has become the focus of the latest raft of debt anxiety.

For months, Italian Prime Minister Silvio Berlusconi's governmentdenied his country was even in economic danger.

Finally last Friday,Berlusconi pushed up the date of implementing an almost $100-billion austerity package. The Italian leader called a last-minute news conference where he promised to make the cuts in 2013, a year sooner than planned.

It was a late and many sayinsufficient move to reassure investors and the European Union that Italy is serious about reducing its almost $3 trillion debt.

Observers say some bank governors want Italy to make even bigger public spending cuts even sooner.