Washington - US President George W Bush on Thursday called for a "common policy" between the United States and Europe to address the financial crisis that has threatened the world's economy.

Bush, meeting with Slovak President Ivan Gasparovic, said he discussed "our common desire to work with our European friends to develop a best as possible common policy."

Bush on Wednesday spoke with French President Nicholas Sarkozy, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and Italian Prime Minister Silvio Berlusconi to coordinate effort to prevent more economic damage.

Bush's comments came ahead of a meeting of the finance ministers of the world's seven wealthiest democracies in Washington on Friday and Saturday to address the crisis, and as the head of the International Monetary Fund warned the world was on the "cusp" of a recession.

Dominique Strauss-Kahn, the IMF managing director, said the only way to prevent a recession would be through international cooperation. "It's fair to say that all of us have underestimated the strength of the financial crisis," he said.

Meanwhile, the White House confirmed Thursday that is weighing the possibility of taking ownership stakes in banks to bolster its effort to restore confidence in financial markets.

"It would include an equity stake," Perino said, before adding such action would come in the form of "capital injections that would actually be investing in banks, but not taking them over."

Perino said Treasury Secretary Henry Paulson was granted the authority to buy stakes in the banks as part of the Bush administration's 700-billion-dollar-bailout package to rescue the financial sector.

Bush launched the largest US government intervention in history with his bailout package to stave off further economic damage caused by the crumbling financial industry.

The crisis has sparked a historic tumble on Wall Street, plunging the stock market down by more than 30 per cent so far this year. The turmoil has spread to international markets and prompted swift action by European and Asian governments aimed at containing the damage and Bush has been on the phone with foreign leaders.

The crisis will be the main topic at an annual gathering of G7 finance ministers in Washington on Friday. The ministers from the seven leading democratic and economic powers will meet with Bush on Saturday. (dpa)