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US Urges Immediate Financial Action in Europe


US Treasury Secretary Timothy Geithner speak with Singapore FM Tharman Shanmugaratnam, right, during the official group photo at International Monetary Fund (IMF) and World Bank Annual Meetings at IMF headquarters in Washington, September 24, 2011.

US Treasury Secretary Timothy Geithner speak with Singapore FM Tharman Shanmugaratnam, right, during the official group photo at International Monetary Fund (IMF) and World Bank Annual Meetings at IMF headquarters in Washington, September 24, 2011.

The top U.S. finance official is sending a warning to his European counterparts, telling them they must act now to stop the continent's debt crisis from spreading.

U.S. Treasury Secretary Timothy Geithner told leaders of the International Monetary Fund Saturday that European governments must work closely with the European Central Bank to make sure no country is allowed to default.

Geithner called government debt and bank debt in Europe the biggest risks to the world economy. He said without conclusive action by European governments, the threat of what he called a "cascading default" will undermine any other recovery efforts.

He also said solving the crisis will only become more difficult if European leaders refuse to act until the crisis becomes more severe.

The European Union and the IMF have already provided billions of dollars to prevent the Greek economy from collapsing. There are also concerns about the financial health of countries like Portugal and Ireland.

On Friday, IMF Managing Director Christine Lagarde said the global economy is in the grip of a "crisis of confidence" and urged nations to move quickly and act together to solve problems.

The comments come as finance ministers and central bankers from around the world gather in Washington for talks with World Bank officials and others.

Global markets sustained major losses earlier this week after the U.S. central bank warned that it sees "significant downside risks" to the already struggling U.S. economy, and that a complete recovery is years away.

Some information for this report was provided by AP, AFP and Reuters.

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