Financial turmoil strikes as G-7 officials gather

Finance ministers and central bank presidents from the world's seven major industrial countries — the United States, Japan, Germany, France, Britain, Italy and Canada — were scheduled to arrive Friday for discussions in this small snow-swept Canadian town about 200 miles (320 kilometers) south of the Arctic Circle.

The talks are expected to be dominated by the question of how much longer extraordinary government stimulus should be provided to lift economic growth.

The risks still facing the global economy were highlighted dramatically after bad economic news sent markets plunging around the world on Thursday.

The Dow Jones industrial average fell by 268 points or 2.6 percent, its biggest one-day loss in seven months.

The slide had begun in Europe over concerns about high debt levels in Greece, Portugal and Spain. Worries in those countries set off broader concerns that government will have difficulty containing rising debts and borrowing more money to help revive their economies.

On Friday, the global downturn extended to Asia, where markets from Tokyo to Hong Kong to Sydney dropped 2.5 percent or more.

U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke were meeting with their counterparts from the other G-7 countries.

Geithner is expected to urge other G-7 nations to keep providing stimulus through the rest of this year, arguing that without continued government support the fledgling recoveries could falter, plunging the world back into recession.

The talks, which will begin with a dinner Friday night, were scheduled to wrap up with a closing joint news conference on Saturday afternoon.

The meeting was taking place in the most unusual G-7 setting ever: a tiny outpost where temperatures can hit far below freezing in February. Canadian Finance Minister Jim Flaherty invited the other finance officials to begin their Arctic stay with an afternoon of dogsledding.

Flaherty, the gathering's host, chose Iqaluit in part to drive home Canada's claim to a region that may contain one-fifth of the world's petroleum reserves.

Some countries have expressed concern about how long stimulus aid should be maintained. They worry about soaring budget deficits and the risk of inflation.

"We need to see a resumption of private-sector growth, but the key is that you don't want to withdraw government support prematurely," a senior U.S Treasury official told reporters. He spoke on condition of anonymity because he was speaking before the finance officials' discussions.

Geithner will likely point to the mistakes nations made during the Great Depression, when a tentative rebound fizzled after governments withdrew emergency support too soon.

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