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Russia Urges Global Financial Reform

Russian President Dmitry Medvedev says the world financial system needs an overhaul.

Russian news reports say President Medvedev plans to tell a mid-November gathering of leaders from the G-20 nations in Washington that a new system should improve risk management, place less reliance on the U.S. dollar as a reserve currency, and make other reforms.

In the meantime, U.S. consumer spending - a key driver of the world's largest economy - dropped in September. Friday's report from the Commerce Department says it is the sharpest decline in four years.

The global financial crisis has also made shoppers in Germany - Europe's largest economy - hesitant to spend. German officials say retail sales fell more than two percent in September, a huge shift from August, when sales increased by almost the same amount.

The falling consumer spending comes one day after a report showed the U.S. economy moving toward recession.

To boost the flagging global economy, central banks around the world, including the European Central Bank and the U.S. Federal Reserve, have been cutting interest rates, and Japan took that action Friday. Lower interest rates make it easier for businesses to borrow the money they need to buy new equipment, expand their operations, and hire new people.

The financial crisis is also causing problems for Argentina, where a major investment rating company, Standard & Poor's, cut the rating on the country's bonds from B/B to B/C on concerns that a deteriorating economic and political environment makes default more likely.

The stream of disappointing economic news is worrying some investors. Some key Asian stock markets dropped sharply today, but U.S. stocks and European share prices posted strong gains.

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