China on Tuesday urged relevant nations to take concrete and responsible fiscal and monetary policies to trim fiscal deficits and resolve debt problems to maintain global investors' confidence.

The call was made at an executive meeting of the State Council, or China's Cabinet, which was presided over by Premier Wen Jiabao, after US and European stock markets as well as most Asian stock markets slumped on fears of mounting economic growth and debt strains.

China supports the joint statement by finance ministers and central bank governors of the Group of 20 on stabilizing financial markets, said a statement released after the meeting.

Relevant nations should work to maintain investment security and stable operation of markets, said the statement, which also urged international communities to strengthen cooperation and coordination of macroeconomic controls to push forward strong, sustainable and balanced growth of global economy.

Finance ministers and central bank governors of the Group of 20 on Monday pledged to take all necessary measures to support financial stability and economic growth. However, the policy actions failed to halt the stock rout.

Wall Street suffered its steepest one-day drop since late 2008 on Monday, after the rating agency Standard & Poor's, in a historic move, downgraded the US credit rating from AAA to AA+ on late Friday due to concerns over the world's largest economy's debt problems.

The Dow Jones Industrial Average plunged 5.55 percent, the broader S&P 500 slumped 6.66 percent, and the tech-heavy Nasdaq dived 6.90 percent.

The selling panic over concerns of a double-dip global economic recession drove down most Asian markets with Japan's Nikkei down 1.68 percent, South Korea's KOSPI down 3.64 percent, and Hong Kong's Hang Seng Index down 5.66 percent.

China's benchmark Shanghai Composite Index bounced back to close flat after opening more than 2 percent lower.

"The international financial markets are experiencing steep turbulence, and the global economic recovery is facing rising uncertainties and instabilities," the statement of the Chinese cabinet executive meeting said.

"We have to watch calmly and handle the situation with imperturbation while taking precautions against risks," it added.

The statement reiterated that China will maintain the continuity and stability of macroeconomic controls and properly handle the balance between managing inflationary pressures, maintaining economic growth and restructuring the economy.

"(The government) will make efforts to bring down the rise of consumer prices and continue to keep stable and relatively fast economic growth," the statement said.

"China's economy continues to develop with a good growth momentum and macroeconomic polices are gradually showing positive effects," the statement said.

The National Bureau of Statistics said Tuesday that China's inflation accelerated to a 37-month high of 6.5 percent year-on-year in July, driven by increasing food costs.

The agency also said China's fixed-asset investments rose 25.4 percent year-on-year during the first seven months of the year. Industrial value-added output grew 14 percent and retail sales grew 17.2 percent in July.

The People's Bank of China, or the central bank, has so far raised interest rates three times and banks' reserve requirement ratio six times this year to put a lid on price rises.

The escalating inflation fueled market expectations of an interest rate hike this month to keep prices in check. The inflation pressure also puts the central bank in a tough situation as it tries to tame prices without hurting the country's economy that is facing increasing risks overseas.

Some economists said the worsening US debt woes may postpone further tightening.

Lu Zhengwei, chief economist of financial markets at China Industrial Bank, said the government may put further tightening moves on hold and watch closely trends of global financial markets before taking actions.

He said there may be another one or two rises in interest rates this year but to predict the timing becomes difficult.

"Although the debt problems have caused global turbulence and major economies show weak growth, China will not likely relax its monetary policies," said Ba Shusong, a researcher for the development research center of the State Council.

However, the possibility of further tightening is also slim, he added.