"We need a coordinated global response to reform the global financial system. We are living in unprecedented times, and we need unprecedented levels of global coordination," the former Portuguese prime minister said.

"The latest events have made clear that the current model of financial regulation and supervision needs to be revamped at international level. We need Asia to be on board," he said.

"We hope leaders from Asian and European countries will take this opportunity to fully exchange views on how to strengthen coordination, cooperation in dealing with this issue. And we hope their discussion will be fruitful," said Barroso.

Host China has also said that the current world economic situation is grim and complicated.

"The emerging markets and developing countries are confronted with financial risks, weak foreign demand and mounting inflation," Chinese President Hu Jintao said.

Launched in 1996 as an informal dialogue mechanism, ASEM now includes 45 members, a body representing over 50 per cent of the world's gross domestic product.

The European side is represented by 27 European Union nations and the European Commission. The Asian members count 10 countries of the Association of Southeast Asian Nations (ASEAN) plus China, Japan, South Korea, India, Pakistan, Mongolia and the ASEAN Secretariat.

With the world preoccupied with the financial turmoil, the two-day summit will also draw the leaders' attention to other topics of energy, climate change and food security.

China will put forward a proposal on building an eco-city network in Asia, while France, which holds the rotating EU presidency, will present a statement on climate change, Xinhua news agency reported.