Debt crisis for Europe to deal with: Canada FM

(IQALUIT) - G7 finance ministers and central bankers will discuss a looming European debt crisis at talks here, but it is for the EU to address it, Canadian Finance Minister Jim Flaherty said Friday.

"Fundamentally, this is an issue for the European Union, but a number of countries represented here are EU countries, so it's a matter of concern that I'm sure we'll talk about tonight and tomorrow," Flaherty said.

"We've had some preliminary discussions on that subject," he told a press conference after dog-sledding on frozen Frobisher Bay with his G7 counterparts.

"The European Bank, of course, is here. There are some concerns about Greece," he added.

Canada's federal debt is less than three percent of the more than 30 trillion US dollars owed by G7 nations, and only 29 percent of its gross domestic product.

As Flaherty spoke, fresh turmoil erupted in world financial markets as heightened fears over eurozone debt and a disappointing report on US jobs cast renewed doubts on the global economic recovery.

Market plunges accelerated Thursday's heavy losses amid mounting fears over the impact of the tattered finances of Greece, Spain and Portugal on the 16-nation eurozone and a potential sovereign debt default in Europe.

Greece has been placed under unprecedented EU surveillance as it attempts austerity measures to slash its massive debt and 12.7-percent public deficit, while Portugal's deficit hit 9.3 percent last year, its highest since 1974.

"I think we have to be very mindful of the potential failure of domestic economies and of the persistence of some toxic assets and some banks," Flaherty said.

"We've been advocating for a long time now that we need to fix the banks," he commented, before joining his G7 peers for a dinner meeting.