"It is our common wish ... that we get more transparency in financial markets," Chancellor Angela Merkel said after a regular informal meeting with French President Nicolas Sarkozy at a government guest house north of Berlin.

She said that, along with fair trade and fair competition, that "must be a common European concern."

In a letter to Merkel and other leaders last month, at the height of market volatility triggered by the crisis in the U.S. home loan market, Sarkozy had urged leading industrial countries to better monitor international financial markets.

One factor contributing to the recent turbulence was lack of clarity about who held securities based on U.S. home mortgages, and what the potential risk was as foreclosures rose.

Sarkozy has called on leading industrial countries to investigate the role of rating agencies in identifying risks that would lead to financial market crises.

"I am for globalization; I am not for an economy of speculation," he said at a joint news conference with Merkel. "The true market economy is based on transparency and reciprocity."

The two leaders issued a joint statement in which they stressed that "open markets are the guarantor of Europe's prosperity and development."

"However, we note that the significance of non-tariff barriers to trade and investment, as well as the use of unfair practices in the world economic framework -- which include politically influenced exchange rates -- have reached a disquieting scale," the statement added. It did not point to any one country, but China has attracted criticism abroad over the value of its yuan.

The statement called for a code of conduct for the hedge-fund industry, a long-standing German proposal that has met with little enthusiasm from the U.S. and Britain.

Merkel said earlier this year that Berlin was considering rules that might prevent state-controlled foreign funds from buying German companies if their countries give no access to German capital. Concern has arisen recently about investments abroad by countries with large currency reserves, such as China and Russia.

"This is not about arbitrary regulation, but about reciprocity -- in other words, Europe creating similar conditions for itself that others create for themselves," she said on Monday.

"The second thing is that we simply need more transparency about certain things -- for example, the transparency of hedge funds and the transparency of ratings agencies -- because we cannot explain to anyone at home that, unfortunately, no one knew anything but now many are affected," she added.

Also Monday, Merkel backed a proposal Sarkozy made last month for the creation of a committee of experts to reflect on the medium-term future of the European Union.

"Germany supports this idea, and we will propose in the European Union that such a committee be set up, and that it draw up proposals on the future structures of the European Union within about two years," she said.