Darling meets G7 for credit crunch talks

LONDON (Reuters) - Chancellor Alistair Darling will meet counterparts from Germany, France and Italy in Paris on Thursday to discuss how best to respond to the recent credit crisis.

The meeting comes ahead of a gathering of leaders from the four countries in London on January 29, hosted by Prime Minister Gordon Brown.

Darling will argue that the Financial Stability Forum -- a committee of national regulators -- should work more closely with the International Monetary Fund to manage risks from the financial system.

Britain is keen the IMF and FSF should provide regular updates on market vulnerabilities and how best to tackle them.

"The response to the recent financial turbulence must be international," a Treasury spokesman said. "Britain is leading that process with our European partners to ensure that any efforts are co-ordinated, measured and principle-based."

Worries over banks' exposure to risk debt have sent global credit markets into a tailspin in recent months, creating headwinds for the broader economy.

The meeting has caused consternation in some smaller European countries. Belgian Prime Minister Guy Verhofstadt has said issues that affect global markets should be tackled at European Union level, rather than among a select group of countries.

(Reporting by Christina Fincher and Fiona Shaikh, editing by David Christian-Edwards)