The leaders of Germany and France called on Saturday for an ambitious overhaul of world financial rules ahead of a summit where European nations hope to forge a common response to the global crisis.

German Chancellor Angela Merkel will host the leaders of Europe's big economies on Sunday in Berlin and is keen for the meeting to focus on long-term financial reforms and not be hijacked by new problems, notably worries about the fragility of some euro zone and eastern European nations.

"We want to ensure that in the future there are no gaps in the world when it comes to supervising financial market products, market players and instruments," Merkel said in her weekly podcast.

The Berlin summit aims to forge a European consensus ahead of a G20 summit in London on April 2.

"To this end we will agree prepared measures on Sunday that allow us to present a united and ambitious front in London," Merkel said.

World leaders are under pressure to show they can deliver on pledges made at a November G20 summit in Washington, where they unveiled a detailed plan for combatting the financial crisis and guarding against future meltdowns.

French President Nicolas Sarkozy, accused by some EU partners of distorting competition by giving aid to domestic carmakers, said Europe should unite behind bold measures to combat the financial crisis.

"I will not associate myself to a position that does not give an ambitious response to this deep crisis," he told reporters at a farm fair in Paris.

He rejected accusations that billions of euros in state loans to Renault and PSA Peugeot-Citroen amount to protectionism.

European members of the G20 must show in Berlin they can overcome a war of words on trade and agree on how far new regulations should go.

German officials have told Reuters in recent days that Britain remains wary of a push by other European states like Germany and France to subject hedge funds to strict supervision.

Merkel said in her podcast that a stronger regulation of hedge funds, which Germany pushed for in vain during its presidency of the G8 in 2007, remained a top priority.

She also said there was broad support for her idea for a new global economic charter, which would seek to enshrine common principles on corporate governance, fiscal cooperation, social protections and fighting corruption.

Merkel will host the leaders of Britain, France, Italy, Spain, the Netherlands, Czech Republic and Luxembourg on Sunday, as well as top European central bankers.

With euro zone countries like Ireland under severe financial pressure, Germany said on Friday that big euro states had begun thinking about how they might come to the aid of weaker members for the first time in 10-year history of the currency area.

International Monetary Fund head Dominique Strauss-Kahn, speaking in Rome, voiced support for the idea of a common European bond, a step which could alleviate pressure on financially weak euro states that are being forced to pay hefty premiums over stronger bloc members to finance their debt.