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G7 finance ministers pose for a group photo after their meeting at the Treasury Department in Washington October 10, 2008. (L-R) are: Jim Flaherty of Canada, Christine Lagarde of France, Peer Steinbrueck of Germany, U.S. Treasury Secretary Henry Paulson, Italy's Economy Minister Giulio Tremonti, Shoichi Nakagawa of Japan, Britain's Chancellor of the Exchequer Alister Darling and Eurogroup Chairman Jean-Claude Juncker. REUTERS/Yuri Gripas

WASHINGTON (Reuters) - The world's rich nations vowed on Friday to take all necessary steps to unfreeze credit markets and ensure banks can raise money but they offered no collective course of action to avert a deep global recession.

In a surprisingly brief statement following their meeting in Washington, the Group of Seven stopped short of backing a British plan to guarantee lending between banks, something many on Wall Street saw as a vital step to end 14 months of turmoil and growing panic on financial markets.

"The G7 agrees today that the current situation calls for urgent and exceptional action," the United States, Canada, Britain, France, Italy, Germany and Japan said.

In a separate statement, U.S. Treasury Secretary Henry Paulson said Washington was developing plans to buy equity stakes in financial institutions as a way to repair balance sheets damaged by huge credit losses.

The finance leaders agreed to use all available tools to support "systemically important" financial institutions and prevent their failure, and ensure banks can raise capital "in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses."

The statement may not be enough to allay the sense of panic that has swept through global markets in recent weeks after Lehman Brothers tumbled into bankruptcy, triggering a wave of risk aversion that left banks hoarding cash.

"The markets wanted maybe more assurance that there would be a unified global backstopping of the banks, and it doesn't sound like that's in there," said Kim Rupert, managing director of global fixed income analysis at Action Economics.

Without credit, economic growth will collapse, and investors were looking to the G7 for a comprehensive plan to get credit flowing smoothly again.

"Right now, everybody's scared, they're panicking," said Mark Waggoner, president of Excel Futures Inc in Huntington Beach, California. "Unless they see action, they're still going to panic."

"Part of the problem is no matter what they do it's not going to be an instantaneous fix and everybody wants a fix that's immediate," he added. "It's just not going to happen."

(Reporting by Reuters' G7 team and Joan Gralla in New York; Writing by Emily Kaiser)