Brown's 'big 4' summit to offer little succour to markets

Sliding stock prices, another bank scandal and a worrying global outlook will give leaders of Europe's four biggest economies plenty to talk about on Tuesday but concrete measures to soothe troubled markets are unlikely.

Prime Minister Gordon Brown called the London summit to discuss the credit crunch weeks ago but the stakes are much higher now as recession looms in the U.S. and policymakers struggle to restore a frightened public's confidence.

The U.S. Federal Reserve last week was forced into making the biggest interest rate cut in quarter of a century and French bank Societe Generale announced the biggest rogue trading loss in history - 4.9 billion euros (3.6 billion pounds).

Berlin, however, already said on Monday the meeting with German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Romano Prodi will make no substantive announcements.

Nor will the leaders use the meeting to establish a common position ahead of next week's Group of Seven meeting in Tokyo, said an Italian government source. Wrangling over exchange rates will be left to the finance ministers and central bankers there.

In any case, Britain rarely sees eye-to-eye with its continental neighbours on how to police international markets.

So instead, the leaders will look at what effect the market turmoil that started last summer will have on the real economy and what can be done to prevent such events in the future.

More transparency will be the most likely watchword - making it easier to account for the increasingly sophisticated products the financial markets create and sell.

Also for discussion will be how to beef up institutions like the International Monetary Fund and World Bank to focus more on crisis prevention, rather than resolution.

"Recent turbulence, where loans risks were transferred to those least able to understand them, has exposed four big questions around the globe," Brown wrote in an editorial on Friday.

"Reform of the international financial institutions, better cross-border crisis-management; greater transparency in the markets and support for globalisation over protectionism."

WARM WORDS

Last summer's credit crunch that started when banks worried about each other's losses made on dodgy U.S. mortgage lending virtually stopped lending to each other is now making its effects felt everywhere.

Big banks have since announced over $75 billion in losses and write-downs, and central banks have had to pump tens of billions of dollars in emergency loans into money markets to prevent the wheels of capitalist finance from seizing up.

The IMF now looks set to revise down its forecasts for global growth and panic has set into markets, increasing pressure on politicians to be seen to be doing something.

"I will be in London beside Gordon Brown and Angela Merkel to make a certain number of proposals which will ensure this transparency and the morality of financial capitalism," said French President Nicolas Sarkozy.

France is reeling after Societe Generale said on Thursday it had unearthed a $7 billion (3.6 billion pounds) derivative-trading loss, blaming the loss on a 31-year-old trader it said had acted on his own without his superiors' knowledge.

On Monday, the Bank of France chief Christian Noyer said he had delayed telling the government about the fraud in order to prevent leaks as Societe Generale unwound the huge positions built up by the rogue dealer.

The government is still picking up the pieces after the country's first "run on a bank" in well over 100 years, sparked when mortgage lender Northern Rock turned to the government for help, saying the credit crunch had starved it of funding.

Merkel, meanwhile, is dealing with hefty losses for her Christian Democrats in a state election. And Italy's Prodi has already resigned.