EU and Brazil call for united action on debt crisis

"It is fundamental that there be political coordination among countries to face up to the current international situation," Brazilian President Dilma Rousseff told journalists after meeting officials at the European Union Council and European Commission.

"The absence of effective regulation over the financial system lies at the root of the problem," she said.

The economy was the focus of the annual summit, which traditionally deals with trade and investment relations. The EU's inability to mount an effective response to its debt crisis has frustrated Brasilia, Washington and Beijing, and market confidence has crumbled amid fear of global recession.

Leaders said more effective financial regulation was vital to preventing future crises and stopping problems in individual economies from spreading to other countries and regions.

"We need to reform global financial architecture so as to avoid financial crises in future," EU President Herman Van Rompuy told EU and Brazilian business leaders later on Tuesday.

He said that EU leaders, who meet later this month, and a gathering of G20 leaders in Cannes, France in November, would have to show a more unified response to the economic troubles.

"Strong and coordinated action will be necessary to avoid the global economy falling back into recession," he said."The EU and Brazil will cooperate closely to prevent this from happening at the G20 summit in Cannes ... We need more cooperation on trade and exchange rates."

Rousseff's country lived through its own debt crisis in the 1980s before emerging as an economic power, and she said that "recessive fiscal adjustments" when Brazil had debt problems had only deepened the stagnation.

"We will only be able to exit the crisis through stimulation to economic growth," she said. On her first trip to the EU as president, Rousseff took no questions from the press.

The EU is Brazil's main trading partner, and EU investment in Brazil accounts for more than the bloc's combined investments in China, India and Russia, according to EU data.

Brazil wants more EU investment and participation in its booming high-tech industries, including telecoms and oil extraction and refining.The EU wants to benefit from a Brazilian economy that grew 7.5 percent last year, its fastest pace in 24 years.