Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi roiled international markets today, first saying world leaders were discussing shutting down global financial exchanges, and then saying he didn't mean it.

Heads of government may seek to ``rewrite the rules of international finance'' in a bid to end the world market turmoil, he said at a press conference in Naples. Less than an hour later, after the White House denied any plan to shutter Wall Street, Berlusconi reversed himself, saying he was just repeating something he heard on the radio.

``The hypothesis wasn't put forward by any leader, including myself,'' he said. The Dow Jones Industrial Average, which fell as much 8.1 percent in early trading, pared some of those losses after his initial remarks, as did Europe's Stoxx 600. The index was down 4.3 percent at 1:15 p.m. in New York.

``He can do these things in Italy, but he can't get away with it when he is dealing with something worldwide,'' said James Walston, professor of politics at Rome's American University. ``He is a world leader, but is out of his depth.''

Berlusconi's comments came as Group of Seven finance ministers and central bankers met in Washington to discuss ways to shore up the international financial system and investor confidence. The U.S. and European countries are bailing out banks in order to stave off the kind of economic collapse that led to the Great Depression more than 70 years ago. After central banks cut rates globally this week, political leaders are still struggling to come up with a coordinated response.

Nazi Gaffe

It's not the first time Berlusconi has misspoken. In 2003, just after taking over the EU's six-month rotating presidency, Berlusconi likened a German member of the European Parliament, Martin Schulz, to a Nazi concentration camp guard.

The comments strained relations between Berlusconi and former German Chancellor Gerhard Schroeder, and Berlusconi later apologized both to the German leader and to the European Parliament.

Shortly after the Sept. 11, 2001, attacks on New York and Washington, Berlusconi said Islamic countries were uncivilized and that Western countries would need to ``conquer'' them in order to bring them into the modern world.

In 2006, during his election campaign against former Premier Romano Prodi, he said people who voted for his rival were ``coglioni,'' which is a vulgar term for testicles.

To contact the reporter on this story: Steve Scherer in Rome at scherer@bloomberg.net

Last Updated: October 10, 2008 13:31 EDT