Upbeat bankers clashed with pessimistic economists on the opening day of the World Economic Forum, where the movers and shakers of global politics and business argued over whether to move forward with financial reforms, or to abandon what some claim would be a ruinous path toward over-regulation.

Just hours ahead of President Barack Obama's first State of the Union address, bosses from Deutsche Bank, Lloyd's and other financial giants warned Wednesday that a flood of new regulations risked choking off a global economy recovery. Others urged Obama, who has proposed restricting bank risk-taking, to push forward with stronger reforms.

In his keynote address, French President Nicolas Sarkozy is calling for tighter regulations including new accounting rules and executive pay limits in his keynote address at the World Economic Forum.

Mr. Sarkozy told the gathering of world business and political leaders that the risks are too great if “we do not change the regulation of our banking system and the rules for accounting and prudential oversight.”

Mr. Sarkozy that excessive profits and pay packages “will not longer be tolerated” when they have no relationship to the creation of wealth and jobs.

He also attacked free trade, saying its prioritization over all else has “weakened democracy.”

The discussions in the rarefied air of this Swiss Alpine resort reflected the broader debate and anxiety over the global economy, and how to address an uneven recovery powered by a booming China and held back by high unemployment in the United States and other wealthy nations.

“Let's get good regulation, better regulation, but not more regulation,” said Peter Levene, chairman of British bank Lloyd's.

Peter Sands, the CEO of Britain's Standard Chartered Bank, added that his industry already has been “fundamentally changed” by tighter regulations and supervision, while Deutsche Bank Chairman Josef Ackermann said “we will all be losers” if governments clamp down on markets too zealously.

“The pendulum might have swung too far,” Mr. Ackermann warned. “Consistent and global rules, and a level playing field is absolutely key to the global economy.”

Mr. Obama is expected to push Wednesday evening for greater regulation of Wall Street, and there are calls in the United States and Europe for tougher taxation on financial institutions to recoup the billions governments have doled out in rescue packages since 2008.

Coupled with the high unemployment much of the rich world is experiencing, there is strong public pressure for action against the sectors that were so deeply involved in leading the world into recession. Some economists said more needed to be done.

“Obama's proposals on banking regulation are finally going in the right direction ... but they are not enough,” said economist Nouriel Roubini, who gained prominence for predicting the financial and economic crisis. Mr. Roubini, dubbed “Dr. Doom” for his grim assessments, suggested separating commercial and investment banking, and other steps to avoid a return to “business as usual” for banks.

Bankers rejected that approach. “Would it help the recovery for big banks to be broken up? The

unambiguous answer is no,” said Mr. Sands, urging a cautious approach to reform. “The stakes are very high. If we get it wrong in one dimension, we will end up stifling growth. If we get it wrong in the other dimension we end up with another crisis.”

The five-day gathering was assessing a host of other issues facing the planet, from disaster aid in the aftermath of Haiti's devastating earthquake to climate change.

But the most pressing concern was steadying a shaky world economy that is likely to face tough challenges in 2010 as rich world unemployment remains high and governments are forced to pull back from lavish bailouts and stimulus packages that have propped up banks and other industries.

“China alone cannot be the only engine of global economic growth,” Mr. Roubini warned. “In the first half, you are going to see the effects of the fiscal stimulus ... in the second half of the year you will see a fall in the U.S., Europe and Japan.”

Some 2,500 participants are expected in Davos. Headliners include Presidents Luiz Inacio Lula da Silva of Brazil and Jacob Zuma of South Africa. Former U.S. President Bill Clinton will encourage big business to support Haiti's reconstruction, while “Avatar” director James Cameron and classical pianist Lang Lang are the event's top cultural representatives.

The U.N. labor agency said 27 million people lost their jobs last year, with almost half of the losses in North America, Japan and Western Europe. The agency predicted an additional 3 million people in the rich world could lose their jobs or fail to find employment in 2010.

Dennis Nally, global chairman of PriceWaterhouseCoopers, said he was “cautiously optimistic” about growth this year, but he acknowledged: “It's not a robust recovery from a job creation standpoint.”

For emerging economies, the mood was mostly positive. While there was concern about an over-reliance on these new engines of growth, Mr. Nally suggested that China and India no longer be included among their ranks.

“It's a little bit unfair to call China an emerging market, India an emerging market and they're in the same category as Chad or Mozambique,” Mr. Nally said. “In 2014, the GDP of the emerging markets will surpass the GDP of the developed markets. Some of these countries have emerged already. We should come up with a better term.”