Gulf states, which lost billions of dollars in investments in troubled Western banks, said that a coordinated global effort was urgently needed to prevent the world economy from plunging into recession.

Gulf officials told the UN General Assembly that the effort should include regulations and measures to remedy flaws, restabilise the financial system and prevent such situations from happening again.

'No region of the world has been unaffected by the repercussions of the US credit crisis, which have had an impact on the international financial system, thereby undermining the world economy,' said Prince Saud Al-Faisal, Foreign Minister of Saudi Arabia.

'Our greatest fear is the imminence of a worldwide recession,' if the crisis leads developed nations to take measures that might curb the freedom of international trade and reduce the flow of investments, he added.

The US government's $700 billion Wall Street bailout plan aimed at alleviating the worst financial crisis since the Great Depression -- currently being debated by Congress -- drew praise from some Gulf officials at the UN assembly.

But Gulf sovereign funds, which lost billions in emergency capital-raising funds to Western banks this year and last, have no plans for similar action yet. Gulf bourses this month hit 17-month lows after Lehman Brothers imploded.

Record revenues from oil at over $100 a barrel financed a Gulf economic boom and partially shield the world's top oil exporting region from the credit crunch's impact. But tightening credit conditions in the region are raising the cost of expanding energy capacity and adding to delays.

'The crisis faced by the world financial sector recently almost led to a global economic catastrophe,' said Bahraini Foreign Minister Sheikh Khaled bin Ahmed Al-Khalifa, adding it exposed how fragile the financial order is.

The United Arab Emirates (UAE) foreign minister echoed views from other Gulf officials who said a joint global mechanism is badly needed to stem the problem.

This should 'contribute to the establishment of well-enforced and transparent rules for regulating the international financial markets,' said Sheikh Abdullah bin Zayed Al-Nahayan.

Any global agreement, Prince Saud said, must 'secure a financial system that offers equal opportunities to all parties while ... providing appropriate liquidity for the developing countries and safeguarding their monetary reserves from the collapse of any of the major international currencies.'    

The Saudi minister reiterated a message from fellow Opec producer Kuwait earlier this week that the big rise in oil and other commodity prices is beyond producers' control and means cooperation between producers and consumers is paramount.

'It would be unfair to require some to bear burdens exceeding their capacities while showing indulgences to others who have been more instrumental in aggravating the problem and are more capable of bearing the burdens,' said Prince Saud, who did not deliver the speech but whose remarks were circulated.

Kuwait's Prime Minister, Sheikh Nasser Al-Mohammed Al-Sabah, expressed 'deep concern' on Thursday over the global financial crisis and welcomed what he said were 'bold steps and actions' taken by the US government to address it.

Kuwait's wealth fund, Kuwait Investment Authority, was lambasted by lawmakers for investing $5 billion in January into Citigroup and Merrill Lynch. - Reuters