Political leaders urged U.S. President-elect Barack Obama on Wednesday to help forge a new economic order to lead the world out of its worst financial crisis since the 1930s.

Excitement about the election of Democrat Obama as the first black U.S. President was tempered by an awareness of the challenges he faces as the world's biggest economy labors in recession.

"We need to change the current crisis into a new opportunity. We need a new deal for a new world," said European Commission President Jose Manuel Barroso.

"I sincerely hope that with the leadership of President Obama, the United States of America will join forces with Europe to drive this new deal," he added.

Underlining the economic woes Obama faces, U.S. private employers cut a larger-than-expected 157,000 jobs in October, a report by a private employment service showed. Initial market reaction to the election was sober, with the dollar retreating against the pound and the euro and Wall Street expected to fall after an election-day rally.

European shares were down two percent, but Asian stocks earlier closed at three-week highs.
"The market is maybe reflecting the hard work ahead and difficult economic circumstances new president Barack Obama has inherited," said Keith Bowman, analyst at Hargreaves Lansdown.

Obama does not take office until January, leaving outgoing President George W. Bush to host a summit of world leaders in Washington on Nov. 15 to discuss the global financial crisis which has its roots in the collapse of the U.S. housing market.

That summit will tackle new ways to regulate the world's financial sector as the world heads into recession.

Authorities are trying to soften the impact of the downturn with support for banks, cheaper lending and stimulus measures, which have already amounted to around $4 trillion.

Obama will move quickly to appoint his top team.

The shortlist likely includes former Treasury secretary Lawrence Summers, ex-Federal Reserve Chairman Paul Volcker and Timothy Geithner, head of the Federal Reserve Bank of New York.

Obama has advocated a second government stimulus package worth $175 billion that would include money for investments in infrastructure as well as another round of tax rebates.

The U.S. Treasury is expected to announce on Wednesday the return of the three-year note when it sets out plans for borrowing which could total $2.1 trillion in the current fiscal year, to fund its massive bailout program.
(Reuters)