PARIS, Oct 16: Calls mounted on Thursday for an overhaul of the global financial system as stocks took a new hammering and Switzerland took drastic action to defend its prized banks with a $60bn package for UBS.

The Tokyo stock market suffered its worst loss for two decades, closing down more than 11 per cent and European indices shed almost 6.0 per cent in early deals, rallying to show losses around 3.0 per cent later, after the Dow Jones index fell 7.8 per cent.

Amid mounting recession fears, an emergency summit of the Group of Eight wealthy powers is expected to be held in November and President Nicolas Sarkozy of France said he would press Europe’s calls for drastic reform of the financial system when he meets US President George W. Bush this weekend.

EU leaders meeting in Brussels demanded greater oversight in Europe after the financial turmoil forced them to commit more than 1.8 trillion euros (2.45 trillion dollars) to banks and the money markets.

In a draft statement likely to be endorsed at a summit, the 27 EU leaders said they would set up a financial crisis cell to act as an early warning system and revived plans to beef up Europe-wide supervision of cross-border finance groups.

British Prime Minister Gordon Brown, whose rescue of British banks has earned global praise, said the world needs a better way of supervising our financial system, we need an early-warning system.

Switzerland was forced to take emergency measures to prop up its key banking sector, pouring almost 60 billion dollars into the biggest bank UBS, one of heaviest losers from the US bad mortgage subprime crisis.

The federal state will take a temporary 9.3 per cent stake in UBS. The second-biggest bank Credit Suisse, said it did not need state help but has turned to a group of investors for 10 billion francs ($8.79 billion, 6.54 billion euros) in new capital. The biggest participant is a Qatari sovereign wealth fund.

Banking is a driving force of the Swiss economy and UBS, which has announced staggering figures for the damage done by its exposure to the US home-loan market.

But Japanese Prime Minister Taro Aso said stocks are falling because investors believe the $700-billion US banking rescue plan does not go far enough.

He said a bottom to the Tokyo stock market was not yet in sight after the Nikkei stock index plunge. Taking their lead from Wall Street’s worst ever points fall, Seoul lost 9.4pc, Sydney 6.7pc and Hong Kong lost almost five per cent lower.—AFP