The European Union is set to back an International Monetary Fund call for $500 billion to fight the global financial crisis, a document showed on Monday as Japan posted its first current account deficit in 13 years.

A key U.S. policymaker said a coordinated global effort was needed to stimulate demand and drag the world out of recession, while China's central bank reiterated that a 4 trillion-yuan ($585 billion) stimulus for China was sufficient for now.

The IMF, which acknowledged last week its warnings before the crisis were insufficient, has called for a doubling of its funds as a growing number of countries turn to it for help.

The EU document obtained by Reuters outlining the bloc's support is set to be approved by ministers of the 27-nation EU on Tuesday ahead of a meeting at the end of the week to prepare for a G20 summit in London next month.

It is essential that the IMF has appropriate financial means to assist countries particularly affected by the current crisis, said the EU draft document.

China's central bank vice governor Yi Gang, speaking on the sidelines of a gathering at the Bank for International Settlements in Basel, Switzerland on Monday, repeated the bank's view that no further stimulus was needed for China right now.

At this point I think the current package of fiscal stimulus is sound and it seems already effective. So at this point I think the current stimulus package is fine, he said.

FOCUS ON DEMAND

U.S. President Barack Obama's National Economic Council director Larry Summers said stimulating demand should be the focus of the G20, after Japan said the global recession had crushed export demand and overseas investment income in January.

The right macro-economic focus for the G20 is on global demand and the world needs more global demand, Summers said in an interview with the Financial Times.

This notion that the economy is self-stabilizing is usually right, but it is wrong a few times a century. And this is one of those times, Summers said, adding that kickstarting growth should take precedence over ironing out global imbalances.

The World Bank said on Sunday developing countries could face a financing gap of $270 to $700 billion this year as trade income dwindles and rich nations vie for capital.

It said that even at the lower end of that estimate the resources of international institutions would not be sufficient to meet financing needs as more and more emerging and developing countries are hit.

The Asian Development Bank said on Monday the global financial crisis slashed the value of financial assets worldwide by $50 trillion last year, with developing Asia suffering more than other emerging markets.

Financial asset losses in developing Asia totaled $9.6 trillion, or just one over one year's worth of the group's gross domestic product. The previous sense of strength and invulnerability is now gone, the ADB-sponsored study said.

EUROPEAN INDEX AT 13-YEAR LOW

Asian stock markets have held up better than others in the United States and Europe because governments and households in Asia are less burdened by debt, but analysts say the region is now paying the price for its dependence on exports.

We don't believe Asia can outperform the G3 this year, said Clive McDonnell, Asia strategist at BNP Paribas in Hong Kong, referring to Germany, Japan and the United States. In the past few weeks, Asia has rolled over quite clearly.

Japan's Nikkei index fell to a 26-year closing low on Monday on fears about the health of banks and car makers, while Hong Kong-listed shares of HSBC fell to a 13-year trough ahead of a deeply discounted rights issue this week.

The shares continued their fall in London, dropping 10 percent in early trading, and Lloyds shares also fell 14 percent as the British government increased its stake in the bank.

By 0933 GMT (5:33 a.m. EDT), the pan-European FTSEurofirst 300 index of top shares was down 2.2 percent, as was the broader STOXX 600, which hit its lowest level since September 1996.

Markets took some comfort from that fact that U.S. job losses of 651,000 last month were not as high as some had feared, even though unemployment rose to a 25-year high.

Ahead of the jobs report there had been rumors about a possible loss of 1 million jobs, but the result turned out to be basically in line with expectations, said a trader at a Japanese trust bank.

The dollar dipped against the yen and euro as investors trimmed safe-haven buying of the U.S. currency.

Britain has begun quantitive easing -- buying assets such as government bonds with newly created money -- in an effort to kickstart growth, and the Bank of England has cut interest rates to an historic low of 0.5 percent.

Deputy Governor Charles Bean said Britain was in the early stages of a particularly nasty recession and the action was needed to shorten the downturn.

We have the scope to do more if that proves necessary, he wrote in a Daily Mail editorial.

The British Chamber of Commerce said Britain's downturn would be deeper than previously thought, and forecast an economic contraction of 2.8 percent this year.

($1=6.838 Yuan)

(Writing by Georgina Prodhan; Editing by David Cowell)

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