08/08/2011 06:57 EDT | Updated 10/08/2011 05:12 EDT

Jim Flaherty: Global Financial Crisis Will Be Averted


OTTAWA - North American markets are likely to face more selling pressure today following a downgrade in the United States' credit rating and a worsening debt crisis in Europe.

Both factors now threaten to engulf Italy and Spain and have sharpened fears that a fragile global recovery could easily derail.

The G7 held a conference call Sunday to discuss the economy, with Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney taking part.

Flaherty said in a statement he is confident appropriate actions have been agreed to in order to ensure ongoing global financial stability and growth.

G7 members issued a joint statement pledging increased co-operation to attack economic problems and prevent a market meltdown.

The European Central Bank later said it would "actively implement" a bond-purchase program to boost Spanish and Italian bonds and drive down interest yields that threaten those countries with financial disaster.

The Toronto Stock Market is coming off a week in which it lost 783 points or six per cent, and all signs point to further losses when it opens today.

Markets in Asia and Australia tumbled today, with Japan's Nikkei 225 stock average falling 2.2 per cent to 9,097.56. Hong Kong's Hang Seng tumbled 3.8 per cent to 20,145.82 and South Korea's Kospi was down 3.8 per cent to 1,869.45 after briefly diving nearly seven per cent.

Futures pointed to losses on Wall Street when it opens today. Dow futures were off 260 points, or 2.3 per cent, and broader S&P 500 futures shed 31.30 points, or 2.6 per cent.

Oil prices fell below US$85 a barrel Monday in Asia. Benchmark oil for September delivery was down $2.07 to $84.81 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange.