In a bid to diminish the power of the US-dominated IMF and counterbalance the influence of Western investors, seven Latin American countries have agreed to form a "Bank of the South."

Seven South American leaders -- representing Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela -- signed an agreement to launch the development lending institution, a project first floated in 2007, with a startup capital of $20 billion. Notably, Bloomberg news service reports that Chile, Colombia and Peru did not sign on to the bank.

The plan aims to give the regions a greater voice at international organizations like the International Monetary Fund (IMF), which is seen by many Latin American leaders as an institution that allows wealthy Western countries, particularly the United States, to exert undue influence on the region.

Venezuelan firebrand Hugo Chavez is credited with leading the effort to create the bank. Chavez has declared his intention to leave the IMF and the World Bank, and some observers see this as the first substantial move in that direction.

The agreement was signed during a meeting of 60 Latin American and African leaders in Venezuela, known as the "South-South summit." The aim of the summit, the second annual one held so far, is to create political and economic ties among the poorer southern regions of the world.

"A new stage begins for the union of South America and Africa... We want our house to be model of how the South meets the South," summit host Chavez said in welcoming a final declaration and plan of action to be signed by leaders from both regions.

Chavez and Libyan leader Moamer Kadhafi led calls at the meeting of nearly 30 heads of state and representatives of a further 30 countries for improved ties between the two southern continents.

"We must build an international financial system based on development and not the current perverse rationale," urged Ecuadoran President Rafael Correa, president pro tempore of the Union of South American Nations.

Speaking during the closing hours of the two-day summit held on Venezuela's scenic Isla Margarita resort, Correa called for countries to negotiate a regional and bi-regional monetary agreement "to coordinate our policies and prevent the crisis from deepening in our countries."

Reform of world bodies like the United Nations loomed large at the summit, with Paraguay's President Fernando Lugo calling for a "new world order" and Correa decrying a "grossly unjust world order."

Kadhafi, who lashed out at Western powers in his rambling 95-minute speech at the UN General Assembly, meanwhile called for the creation of a "NATO of the South" by 2011 to counter the military bloc of the United States and European powers.

"The 21st century can be the century of Africa and Latin America," said Brazilian President Luiz Inacio Lula da Silva, who is aiming to make Brazil an industrial powerhouse.

He urged both regions to work together to secure "the opening of European farming markets to African countries" as part of negotiations to conclude the stalled Doha Development Round, which aims to lift millions out of poverty and shore up the global economy.

Chavez, whose country is the top Latin American exporter of crude oil, proposed to launch a public multinational company he dubbed "Petrosur" that would supply fuel to both regions.

The firebrand leftist leader, who used the summit as an opportunity to criticize US and European influence in developing nations, confirmed he supported building a refinery in Mauritania and proposed to build another in Equatorial Guinea to sell oil at a better price.

Energy cooperation between the two regions, which are home to 24 percent of the world's oil and top oil producers like Venezuela and Nigeria, was a key theme at the meet.

The third Africa-South America summit will take place in Libya. At this year's meeting, Chavez was especially effusive about his "brother" Kadhafi, confessing great "admiration" for the leader who was marking his first visit to Latin America since he came to power 40 years ago.

-- With Agence France-Presse