(JEJU ISLAND) - Asian and European finance ministers warned Monday that surging prices for oil, food and other commodities threaten stable world economic growth.

Wrapping up a two-day meeting, they said in a statement that price increases "pose a serious challenge to stable economic growth worldwide and have serious implications for the most vulnerable."

The ministers or their deputies from 27 European Union countries and 16 Asian nations called for coordinated policies to cushion the impact, including greater investment in agriculture and energy and the maintenance of open markets.

"Ministers highlighted the need for further analysis on the real and financial factors behind the recent surge in commodity prices, their volatility and the effects on the global economy," the statement said.

Delegates to the Asia-Europe Meeting (ASEM) of finance ministers, on the South Korean resort island of Jeju, said they remain positive about the long-term global economic outlook but that short-term prospects had weakened.

Downside risks included the US slowdown, tightened credit in world financial markets and "mounting inflationary pressures mainly driven by high energy and food prices."

The ministers, whose countries represent 60 percent of the world's population and about half its output, stressed that both Asia and Europe are "significantly more resilient" to external shocks than a decade ago.

But they are not immune to global economic risks, they said.

The meeting was marked by warnings of the potential dangers of rapidly rising commodity prices.

South Korean President Lee Myung-Bak said the world faces its most serious economic crisis since the 1970s.

"Instability in the global financial market has spread to the real economy, thus putting a damper on world economic growth," Lee said in a speech.

"Coupled with a steep hike in the price of oil, food and raw materials, it is now no exaggeration to say that the global economy is faced with the most serious crisis since the oil shocks of the 1970s."

Lee's government is grappling with a truckers' strike over high fuel prices, the latest in a series of sometimes violent protests worldwide.

The president of the Asian Development Bank, Haruhiko Kuroda, called for safety nets for the poor, reforms to agriculture and measures to increase productivity.

"Food prices can become a very sensitive economic and political issue (in Asia)," he said.

French Finance Minister Christine Lagarde called on oil producers to expand output and pressed for more investment in exploration to drive the price down.

"In the short and longer terms there are global proposals that need to be endorsed -- number one, an increase of production, and number two, additional exploration and production of oil," Lagarde told reporters.

The French minister also urged a change in energy mix patterns and consumption and a "better understanding of how the market functions."

Lagarde last weekend attended a Group of Eight meeting of finance chiefs, at which some delegates expressed suspicion that speculators were driving up oil prices.

Japanese Finance Minister Fukushiro Nukaga told a news conference Asian households normally spend some 60 percent of their income on food.

"To them, short-term immediate measures need to be given," he said.

Nukaga called for more assistance from international organisations to solve Asia's food problems.

"We need to work actively to increase food production," he said.

ASEM International Conference

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