Sacramento - California Governor Arnold Schwarzenegger on Thursday proposed several stringent measures to curb spending and increase taxes in order to deal with a budget shortfall, this office said.

The proposals include a steep increase in state sales tax, a five cent tax on every alcoholic drink sold and an estimated 4.5 billion dollars in welfare and other budget cuts.

The moves are meant to close a projected budget shortfall of 24 billion dollars by the middle of 2010.

Brussels - European Union leaders are meeting in Brussels on Friday to hammer out a common stance on pursuing a rapid overhaul of the world financial system in the wake of the recent round of global market turmoil.

During their lunchtime summit in Brussels, leaders are to discuss a revised paper submitted by the French presidency of the EU, which sets out five guidelines designed to avoid a new credit crunch.

London/Frankfurt - Faced with a looming recession and rapidly falling inflation, Europe's leading central banks delivered hefty rate cuts Thursday as monetary authorities around the world stepped up efforts to trim the cost of money.

While the European Central Bank (ECB) meeting in Frankfurt lopped 50 basis points off its benchmark refinancing rate, the Bank of England meeting in London announced a more dramatic 150-basis-point reduction.

London/Frankfurt - Europe's two leading central banks are expected to announce Thursday big rate cut, as monetary authorities around the world step up efforts to head off a looming recession.

Analysts are predicting that the Bank of England (BoE) and the European Central Bank (ECB) will each announce hefty reductions in borrowing costs which are likely to be followed up with more cuts in the coming months.

Brussels - Europe's leaders have already said that they want the world's greatest powers to create a new brand of capitalism.

When they meet in Brussels on Friday ahead of a major world summit in Washington on November 15, they have to agree on the much more

difficult question of how far they should try to go right now.

Berlin - Germany's government on Wednesday approved an anti- recession package of tax cuts and grants that supporters predict will secure up to 1 million jobs over the next two years.

Chancellor Angela Merkel said the move showed her coalition could beat the economic problems expected in the near future.

"We are going to build a bridge toward the possibility that it will get better again in 2010," she said.