EU resists US calls for more spending

BRUSSELS/WASHINGTON-The European Union resisted pressure to pump more cash into its recession-hit economies just as Washington added $5 billion more to its soaring rescue bill, throwing a lifeline to stricken auto parts makers.EU leaders are expected, however, to agree on Friday to contribute at least $75 billion to the International Monetary Fund to boost its firepower in the face of the worst financial crisis since the 1930s.The IMF warned the world economy could shrink as much as 1 percent this year, in its first contraction since World War Two. It said more swift action to purge banks of toxic assets was necessary to make a gradual recovery next year possible.The European leaders also backed a proposal to double to 50 billion euros ($67.5 billion) an EU crisis fund for eastern European nations outside the euro currency zone.But they defended the stimulus packages they have already launched, despite calls led by Washington for Europe to spend more and after the Federal Reserve's dramatic decision on Wednesday to pump a further $1 trillion into the limping economy."You can't think you can solve everything with taxpayers' money. Stimulus packages are already in place and taking us through this challenging time. We already have done a lot," Swedish Prime Minister Fredrik Reinfeldt said at a summit of the 27-nation bloc.On Thursday, the U.S. government promised $5 billion to auto parts suppliers crucial to the survival of U.S. car makers, in the latest effort to buttress an economy now in its 15th month of recession. As rich countries dish out billions to save jobs and companies, U.N. chief Ban Ki-moon said he would appeal to world leaders at next month's G20 financial summit to keep their pledges of aid to the poor, defenceless in the face of the crisis.
"As the situation is deteriorating ... I am concerned that this may inevitably affect the political will and available resources for the developing countries," the U.N. secretary general told Reuters in an interview.

By Darren Ennis and David Lawder

http://www.reuters.com/article/marketsnews/idINN1959143220090320?rpc=33

As in the days of Noah...