Washington - Leaders from the Group of 20 nations were heading to the United States Friday for an historic summit to address a financial crisis threatening to derail the global economy.

US President George W Bush will welcome the leaders of 21 countries to the White House for a working dinner Friday evening and the group will hold an intensive day of talks Saturday aimed at overhauling the world's financial system.

The G20, a bloc that brings together leading industrial nations and emerging economies, is likely to agree the broad outlines for major changes to the global financial regulatory structure, including a possible "college of supervisors" to monitor the actions of the world's top financial firms.

The leaders are also working on fresh moves to stimulate the global economy, which the International Monetary Fund last week said was headed toward recession. US Federal Reserve Chairman Ben Bernanke said in Frankfurt that central banks stood ready to take additional monetary steps if necessary.

Global stocks have been decimated by the financial turmoil that began with a downturn in the US mortgage market, but many stocks rose on Friday ahead of the summit talks. Wall Street stocks rallied more than 7 per cent Thursday, but began Friday morning sharply lower.

Leaders plan to agree on the "principles" of financial reforms on Saturday and set up a series of working groups to come up with specifics over the coming months. Europe is pushing for another summit and a final plan to to be finalized in 100 days.

But there were some signs of discord. The US has acknowledged failures of oversight as financial firms took unnecessary risks and offered home loans to people who could not afford them. But Bush has pushed back against any wholesale reorganization of the financial industry.

"We must recognize that government is not a cure-all," Bush said in a radio address to be released Saturday. "The crisis was not a failure of the free market system, and the answer is not to try to reinvent that system."

But Bush's clout at the meeting is limited as many governments are already looking toward the incoming administration of Barack Obama, who will be inaugurated January 
20.

Obama will not attend Saturday's meeting but was sending former secretary of state Madeleine Albright to meet with world leaders on his behalf.

A draft of the G20's final declaration was already being circulated Friday and other leaders expressed confidence that a strong deal was well advanced.

"I'm travelling to Washington with optimism. I think there is pressure on the negotiations to complete the job now and show that the world has learned from this crisis," German Chancellor Angela Merkel said before leaving. (dpa)