By Eddie Evans and Elizabeth Piper
NEW YORK/LONDON (Reuters) - U.S. home construction fell to its worst level in 17 1/2 years in signs of a deepening world financial crisis on Friday, and U.S. President George W. Bush said it would take time for government interventions to take effect.
The world's biggest oilfield services company, Schlumberger Ltd, warned that the financial crisis would be felt into next year, and even a call by famed investor Warren Buffett to buy U.S. stocks went unheeded as Wall Street fell.
Bush said he would continue "close consultations" with Europe at a meeting on Saturday with French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso.
"Our European partners are taking bold steps. They show the world that we're determined to overcome this challenge together. And they have the full support of the United States," Bush said in a speech at the Chamber of Commerce.
But he did not specifically mention calls by European leaders this week to reform the financial system that the world has been operating under since 1944.
Writing in the Washington Post on Friday, British Prime Minister Gordon Brown said post-World War II financial institutions were out of date.
"They have to be rebuilt for a wholly new era in which there is global, not national, competition and open, not closed, economies," he wrote.
BUFFETT BUYS
The U.S. government said construction starts on new homes fell 6.3 percent in September to their slowest pace since August 1982.
The day after oil prices fell below $70 a barrel for the first time in 14 months, Schlumberger said weaker drilling activity in North America and some emerging markets would hit its operations into next year.
Wall Street stocks were lower, despite a statement by Buffett, the world's richest man, that U.S. stocks were undervalued.
Buffett wrote in the New York Times that he was buying U.S. stocks for his personal account, saying the market was likely to move higher before sentiment or the economy changed. "So if you wait for the robins, spring will be over," he wrote.
Ukraine said the International Monetary Fund was prepared to give it $14 billion in credit, while Hungary slashed its growth forecast after agreeing on a 5 billion-euro deal with the European Central Bank to keep euros flowing through its banking system.
Iceland, driven close to bankruptcy as frozen credit markets caused its banks to fail, will decide within a week whether to take an IMF loan.
A Ukraine presidential spokeswoman said: "President Viktor Yushchenko would hold a meeting with officials from the IMF, which is ready to give Ukraine credit of $14 billion for the stabilization of our country's financial sector."
In neighboring Russia, hit hard by the crisis and international wariness after Russia's brief war with former Soviet Georgia, Finance Minister Alexei Kudrin said investors had pulled $33 billion out of the country in August-September.
He said stocks would fall further.
A source said another Russian bank could be nationalized, bringing the total to four.
Hungary slashed its forecast for growth next year by almost two percentage points, showing its economy set to suffer even if it can quell market upheaval around its banks and finances.
On world stock markets, buying of cheap bank stocks helped buoy prices though they later relinquished some of their gains.
European stocks rose and the FTSEurofirst 300 index of top European shares was up 1.9 percent.
ASIA STRUGGLES
In Asia, governments scrambled to find ways to shore up their banks and combat an economic slowdown.
Reflecting growing alarm over the widening credit crisis, a panel of Japan's ruling Liberal Democratic Party was considering ways to recapitalize big banks with government money, Kyodo news agency reported.
Japan's Nikkei index closed 2.78 percent higher.
In South Korea, authorities pledged action to stabilize markets. Media reports said the steps, to be announced on Sunday, could include funding for local banks struggling to find international banks willing to lend dollars.
Australia's prime minister held a summit with industry leaders, who said credit was drying up and smaller companies were collapsing despite assurances the economy was in good shape.
Singapore and Malaysia both said they would guarantee all bank deposits until 2010, following similar moves worldwide.
After world governments pledged $3.2 trillion to stabilize the financial sector, money markets have shown tentative signs of healing, though interbank lending is still tentative at best.
The interbank cost of borrowing overnight dollars fell again in Europe although longer rates, including those for euros and sterling, were slower to ease with banks still reluctant to lend for longer periods.
(Reporting by Reuters bureaus around the world; Editing by Brian Moss and Steve Orlofsky)
