Brussels  - European Union leaders were set Thursday to challenge the United States and other world powers to curb financial market excesses and lavish bankers' bonuses as they gathered in Brussels for an informal meeting.

The meeting was intended to hammer out the EU's joint position for next week's Group of 20 (G20) leaders summit in Pittsburgh - talks which seven EU leaders are set to attend.

"It will be the task of those who go to Pittsburgh to convince our American friends that we have to get the international finance community to accept new rules of behaviour," Luxembourg's premier Jean-Claude Juncker told German radio station Deutschlandfunk.

The focus of Thursday's EU meeting is a joint statement drafted by Sweden, current holder of the bloc's rotating presidency, aimed at galvanizing the debate on global financial reform within the G20.

The statement urges G20 members to crack down on the level of bonuses paid to top bank managers with "binding rules ... backed up by the threat of sanctions at the national level."

Strikingly, those rules should allow national regulators to cut the bonuses paid to managers whose banks perform badly, and should "explore ways to limit" bonuses to a proportion of either total pay or total profits, the draft says.

It also calls on world powers to boost the international oversight of financial markets in a bid to prevent future financial crashes.

"No financial location, no institution, no financial product should continue to exist unregulated ... It is not in the interest of the western democracies for something like this to repeat itself," German Chancellor Angela Merkel characterized the EU's approach in the hours before the summit.

The draft also challenges G20 members to draw up an immediate plan for how to reduce the massive deficits they have run up in trying to get out of economic crisis.

"Exit strategies need to be designed now and implemented in a coordinated manner as soon as the recovery takes hold," it says.

The call for the strategies to be designed now is likely to provoke hot debate in the G20: a meeting of the group's finance ministers a fortnight ago agreed on the need for exit strategies, but said only that their timing "will vary across countries."

In the longer term, EU heavyweights Britain and France should also work on bringing in a UN-approved tax on financial transactions to support economic development, French Foreign Minister Bernard Kouchner told daily newspaper Les Echos.

"Nothing can be done unless there is global cooperation and agreement," said Kouchner, stressing that French President Nicolas Sarkozy supports the idea of a so-called Tobin Tax.(dpa)