New York could lose its status as the world's financial capital without key reforms to address business and market regulation, according to a high-profile report.

The report commissioned by New York Mayor Michael Bloomberg and Senator Charles Schumer concluded that financial markets "stifled by stringent regulations, and high litigation risks, are in danger of losing businesses and high-skilled workers to overseas competitors, relegating New York to regional market status and adversely impacting the US economy."

The report, also endorsed by new state Governor Eliot Spitzer, said the city risks the loss of four to seven percent of financial market transactions within five years, resulting in the elimination of 30,000 to 60,000 jobs.

"The financial services industry is one reason that the 20th century was the American century and that New York became the world's capital," said Bloomberg.

"We've outlined a range of practical yet innovative steps to ensure the 21st century is just as bright. This is one of many challenges to our long-term economic health and stability that require we move beyond partisanship to find solutions."

Among the recommendations in the report is for "clearer guidance for implementing the Sarbanes-Oxley Act," the law tightening corporate accounting oversight in the wake of the Enron scandal.

It also urged an easing of immigration restrictions facing skilled foreign professionals, many of whom work in financial markets.

According to the report, growth in US financial markets of 6.5 percent between 2001 and 2005 trailed that of London (8.4 percent) and the eurozone (6.8 percent). It was also below that of Japan (7.5 percent) and the rest of Asia (15.56 percent).

It noted that in 2001, US markets staged 57 percent of initial public offerings (IPOs) by companies around the world. But that went down to just 16 percent in 2005, while IPOs in London and elsewhere rose.

Employment in New York financial markets fell 0.7 percent from 2002 to 2005, while increasing in London by 4.3 percent in the same period.

"The financial markets are a cornerstone of New York state's economy yet, as the study illustrates, we are in danger of losing our pre-eminence as the financial center of the world," said Spitzer.

"We must take these recommendations seriously so as to support an economic climate ripe for financial services while continuing efforts to safeguard the market for investors."

US Chamber of Commerce president Tom Donohue said the Republican Bloomberg and the Democratic Schumer had shone "a bright light on the erosion of the competitiveness of our capital markets."

"We look forward to reviewing their thoughts on how to improve the regulatory, litigation, and enforcement structure so we don't drive capital markets offshore."