By Andrew Quinn
WASHINGTON (Reuters) - President George W. Bush will announce on Saturday that the United States will soon host a summit to discuss the global financial crisis, a senior U.S. administration official said.
The announcement came as Bush prepared to meet French President Nicolas Sarkozy -- who has been publicly advocating for an emergency summit -- and European Commission President Jose Manuel Barroso at the presidential Camp David presidential retreat on Saturday.
With the world gripped by the worst financial crisis since the Great Depression, Sarkozy has called for an overhaul of the international financial architecture established after World War II at the 1944 Bretton Woods conference.
But Bush, who leaves office in January after the November 4 U.S. presidential elections, has not made any public comments about that proposal and White House aides say the Camp David meeting was intended to focus on the immediate crisis.
Fears of a full-blown recession were fueled by figures showing sharp declines in U.S. consumer confidence and new-home construction, and stock markets around the world remain volatile as investors count their losses and ponder if and when the financial gloom may ease.
Interbank lending rates fell this week for the first time since July, providing some hope that the worst of the worldwide banking crisis may have passed.
Global financial institutions continued work to shore up the shaky world economy, with Ukraine saying it may receive up to $14 billion from the International Monetary Fund to stabilize its financial system.
The IMF, meanwhile, said it was investigating whether its chief Dominique Strauss-Kahn abused his power in an affair with a subordinate who has since left the institution -- a potential distraction as world leaders seek to reassess how the world organizes its financial affairs.
SUMMIT WINS U.S. SUPPORT
U.S. officials revealed plans for Bush's announcement after earlier downplaying the Camp David meeting with Sarkozy, whose country holds the rotating European Union presidency.
But the French leader got backing from Canada for the summit proposal during a stop in Quebec, and U.N. Secretary General Ban Ki-moon offered U.N. headquarters in New York as a venue for the meeting.
A senior U.S. official, speaking on condition of anonymity before Saturday's meeting, said Bush now planned to announce that the United States would host a summit "in the near future" to map out ways to resolve the current crisis and avoid future financial shocks.
"The president wants participation and ideas from both developed and developing nations in these discussions," the official said.
Sarkozy had earlier suggested the summit should include China, India and other key countries which were not members of the Group of Eight industrialized
nations.
The credit crunch continued to squeeze countries across the globe.
Iceland, pushed close to financial collapse by the bank crisis, faced more uncertainty as Russia indicated it was not yet convinced it should issue it a loan.
In Russia, Finance Minister Alexei Kudrin said investors had pulled $33 billion out of the country from August through September.
Hungary slashed its forecast for growth next year by almost 2 percentage points, after agreeing on a 5 billion-euro deal with the European Central Bank.
In the banking sector, which has been at the heart of the crisis, Dutch bank ING, the Netherlands' biggest listed bank, said it expects its first quarterly loss ever, sending its shares to a 13-year low.
U.S. CONSUMER CONFIDENCE DOWN SHARPLY
A Reuters/University of Michigan survey said U.S. consumer confidence in October suffered its steepest monthly drop since the survey began in 1952. Earlier a U.S. government report showed construction starts on new homes fell to their slowest pace since January 1991.
"Confidence is collapsing so that's not good even as you have gas prices falling," said Doug Smith, chief economist for the Americas at Standard Chartered in New York. "People are seeing what's happening to their 401ks, stocks and home prices. It's just awful."
An unexpected twist to the financial crisis turned up on Saturday when the IMF announced the investigation of its chief, Strauss-Khan, a former French finance minister who came to the job just under a year ago.
The woman's lawyer said she was not given preferential treatment and Strauss-Kahn said he was cooperating with the investigation.
"I have cooperated and am continuing to cooperate with outside counsel to the Fund concerning the matter," he said in a statement. "At no time did I abuse my position as the fund's managing director."
The IMF probe came as several countries turn to the fund to help ease the effects of the financial crisis and follows more than a year after former World Bank President Paul Wolfowitz resigned amid uproar over a high-paying promotion he authorized for his companion who worked at the bank.
(additional reporting by Tabassum Zakaria at Camp David, Lesley Wroughton in Washington, and Reuters bureaux around the globe. Editing by Jackie Frank)
