In a surprisingly brief statement following its meeting, the Group of Seven (G7) stopped short of backing a British plan to guarantee lending between banks, something many on Wall Street saw as a vital step to end 14 months of turmoil and growing panic on financial markets.

The G7 members acknowledged they could no longer afford a country-by-country, case-by-case approach to crisis management after 14 months of turmoil, and agreed to stay in close contact to coordinate their actions.

After the meeting, US Treasury Secretary Henry Paulson said the US was developing plans to buy equity stakes in financial institutions as a way to repair balance sheets damaged by huge credit losses.

The finance leaders agreed to use all available tools to support "systemically important" financial institutions and prevent their failure, and ensure banks can raise capital "in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses."

Analysts said the statement was unlikely to allay the sense of panic that has swept through global markets in recent weeks after Lehman Brothers tumbled into bankruptcy and triggered a wave of risk aversion that left banks hoarding cash. Without credit, economic growth will collapse, and investors were looking to the G7 for a comprehensive plan to get credit flowing smoothly again, they added.