Markets suffer as G20 disappoints

World stock markets suffered today as the Cannes meetings of the world’s top 20 economies reached no new agreement on how to solve the crisis engulfing Europe.

Investors sought out safe-haven assets such as UK and US government debt and sold equities and the euro after German Chancellor Angela Merkel said few countries in the G20 had committed to the Eurozone rescue fund.

Leaders of the world's major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.

Potential sovereign investors such as China and Brazil wanted to see more detail before they made any firm commitment to put money into the bailout fund.

"There are hardly any countries here which said they were ready to go along with the EFSF (the Eurozone rescue fund)," German Chancellor Angela Merkel told a news conference.

US President Barack Obama joked he had learned a lot in two days about the complexity of the EU's "laborious" decision-making process but said he was confident Europe had the capacity and the right plan to meet the challenge.

"They're going to have a strong partner in us, but European leaders understand that what is ultimately important is to have a strong signal from Europe that they are standing behind the euro," Obama told a news conference.

But a proposal for a financial transaction tax to raise new funding for poor countries failed to win the backing of the G20, though French President Nicolas Sarkozy said he planned to still pursue the idea.

An end-of-meeting G20 communique referred to the tax proposal but failed to support it. "We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes, including a financial transaction tax, inter alia to support development," the communique stated.

World stocks measured by the MSCI all-country world index pared losses to rise 0.1 per cent.

Worries over the outcome of a key vote of confidence in Greek Prime Minister George Papandreou tonight have also overshadowed signs of improvement in the US labour market.

In Europe, the FTSEurofirst 300 index of top regional shares slid one per cent to 980.01, erasing early gains. The index posted its first weekly loss in six weeks.

Italian banks UniCredit and Intesa SanPaolo, heavily exposed to Italy's sovereign debt, fell 6.6 and 4.8 percent, respectively.

The FTSE 100 ended down 0.3 per cent at 5,527.16, while in the US the Dow and the S&P 500 are 0.9 per cent down, and the Nasdaq composite is 0.6 per cent lower.