Brown seeks IMF boost; China feels crisis

LONDON/NEW YORK (Reuters) - British Prime Minister Gordon Brown called for billions of dollars in extra funding for the International Monetary Fund on Sunday, after India cut its main short-term lending rate and China braced for slowdown.

Russia moved 170 billion rubles ($6.41 billion) from a national fund to a state bank, boosting shares in a special session on Saturday, while German Chancellor Angela Merkel promised an "extensive" stimulus package.

Brown, speaking in Riyadh, said oil-rich Gulf States and China should contribute money for the IMF to lend to countries at risk of financial collapse.

"If we are to stop the spread of the financial crisis, we need a better global insurance policy to help distressed economies," Brown said.

But in Shanghai on Saturday, a senior Bank of China executive said China had already started to feel the impact of the crisis, with a sharp slowdown in industrial profit growth and fiscal income.

Bank Executive Vice President Zhu Min also said the global economy will likely enter recession next year with the United States, Europe and Japan posting negative growth.

"That will have a huge impact on China," he said.

Currency volatility is expected to add further pressure on China's banks, which have enjoyed robust profits for years as the country boomed, Zhu said. Earnings growth is now slowing as the economy cools from the impact of the crisis.

"The uncertainties in the world's currency markets have exposed the Chinese banking sector to higher foreign asset risk," Zhu told a financial conference.

In India -- like China, a magnet for foreign investment in recent years as their economies roared -- the central bank cut its main lending rate for the second time in as many weeks to ease a cash squeeze and spur economic growth.

'KNOCK-ON EFFECTS' IN ASIA

Analysts said the surprise move showed Indian concern that strains on its economy were quickly becoming more severe.

"These actions were necessary (and had) to be taken on the liquidity front ... the situation was getting worse," said Vikas Agarwal, a strategist at JP Morgan.

The central bank cut the repo rate, its main short-term lending rate, by 0.5 percentage point to 7.5 percent and banks' cash reserve requirements by 1 percentage point to 5.5 percent.

"The global financial turmoil has had knock-on effects on our financial markets; this has reinforced the importance of focusing on preserving financial stability," the bank said.