"Thus far, equity investors seem to have shrugged off the negative sentiment that prevailed over the summer, but it may be too soon to draw firm conclusions," the OECD said in a report.
"As adjustments have often occurred in waves, and as higher funding costs take typically several months to have their full impact on companies or consumers, it may well be that the recent correction is only a precursor of a more protracted downturn."
Financial institutions and policymakers needed to buy time to ensure an orderly end to the trouble which spilled from the U.S. mortgage sector to financial markets globally last July-August, the report on financial market trends said.
The OECD said the super fund being set up by Citigroup, Bank of America, and JPMorgan Chase to pool securities of ailing special investment vehicles -- thus preventing a further firesale of these asset-backed securities -- was a useful mechanism.
"Time ... is key to solving the turmoil," the OECD said in its latest Financial Markets Trends report.
The Paris-based forum said the U.S. housing market downturn had further to run and would continue to depress mortgage-linked debt held by banks, hedge funds and insurance companies.
"We still have not hit the worst point in resets, delinquencies and ultimate losses on mortgages," the OECD said, adding some $890 billion of subprime, or poor credit quality mortgages will have rates reset in 2008 -- peaking in March.
The OECD report said a hypothetical 14 percent loss rate on subprime mortgages being reset in 2008 could deliver an overall $125 billion hit to lenders.
Including Alt-A, or "near prime", mortgages, cumulative losses in the $200-$300 billion range "seem feasible", it said.
The financial sector exposure to these losses lies mainly in holdings of mortgage-backed securities repackaged within complex Collateralised Debt Obligations (CDOs), variously held by hedge funds, banks and bank-sponsored structured investment vehicles.