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| Another top European bank falters | Another top European bank falters |
| (10 minutes later) | |
| Another major European financial institution is teetering on the brink of collapse after a banking consortium withdrew from rescue talks. | Another major European financial institution is teetering on the brink of collapse after a banking consortium withdrew from rescue talks. |
| Germany's second-largest mortgage lender, Hypo Real Estate, said a bail-out deal had fallen apart. | Germany's second-largest mortgage lender, Hypo Real Estate, said a bail-out deal had fallen apart. |
| Correspondents say its failure would put further strain on financial institutions in other countries. | Correspondents say its failure would put further strain on financial institutions in other countries. |
| The news came as EU leaders at a Paris summit stopped short of offering a US-style rescue plan to banks. | The news came as EU leaders at a Paris summit stopped short of offering a US-style rescue plan to banks. |
| Hypo Real Estate, which has large amounts of bad debt, has suffered from the credit squeeze in international markets. | Hypo Real Estate, which has large amounts of bad debt, has suffered from the credit squeeze in international markets. |
| The bank said a consortium of German financial institutions involved in a government-led rescue plan pulled out of the negotiations after refusing to come up with nearly 36bn euros ($50bn; £28bn) for a bail-out. | The bank said a consortium of German financial institutions involved in a government-led rescue plan pulled out of the negotiations after refusing to come up with nearly 36bn euros ($50bn; £28bn) for a bail-out. |
| The reasons why the consortium pulled out are unclear but a Hypo Real Estate spokesman said the property lender was fighting for its survival. | The reasons why the consortium pulled out are unclear but a Hypo Real Estate spokesman said the property lender was fighting for its survival. |
| Some analysts are saying the bank will not last more than a few days without a rescue package, so action must be taken before the markets open on Monday. | Some analysts are saying the bank will not last more than a few days without a rescue package, so action must be taken before the markets open on Monday. |
| Another meeting of government representatives and private bankers is expected to take place on Sunday. | Another meeting of government representatives and private bankers is expected to take place on Sunday. |
| Executive 'sanctions' | Executive 'sanctions' |
| Correspondents say if Hypo Real Estate does collapse it could plunge already volatile markets even further into debt. | Correspondents say if Hypo Real Estate does collapse it could plunge already volatile markets even further into debt. |
| It has to be indicated to the markets... that European countries will not react as every man for himself Dominique Strauss-Kahn, IMF head href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/how_to_solve_the_crisis.html">Peston: How to solve crisis class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5449&edition=1">Send us your commentsNo business rush to Irish banks | |
| News of the failed plan came as leaders of the major European economies met in the French capital for talks hosted by President Nicolas Sarkozy. | News of the failed plan came as leaders of the major European economies met in the French capital for talks hosted by President Nicolas Sarkozy. |
| Britain, Germany, Italy and France all agreed to work together to support financial institutions but did not agree to set up a big rescue fund similar to that of the US. | Britain, Germany, Italy and France all agreed to work together to support financial institutions but did not agree to set up a big rescue fund similar to that of the US. |
| They decided instead to seek a relaxation of the EU rules governing the amount of money individual states can borrow. | They decided instead to seek a relaxation of the EU rules governing the amount of money individual states can borrow. |
| The leaders also issued a joint call for a G8 summit "as soon as possible" to review the rules governing financial markets. | The leaders also issued a joint call for a G8 summit "as soon as possible" to review the rules governing financial markets. |
| Mr Sarkozy announced a series of other measures - including unspecified action against the executives of failed banks. | Mr Sarkozy announced a series of other measures - including unspecified action against the executives of failed banks. |
| Speaking after the meeting at a joint news conference, he said the four had agreed that the leaders of a financial institution that had to be rescued should be "sanctioned". | Speaking after the meeting at a joint news conference, he said the four had agreed that the leaders of a financial institution that had to be rescued should be "sanctioned". |
| The French president added: "Each government will operate with its own methods and means, but in a co-ordinated manner." | The French president added: "Each government will operate with its own methods and means, but in a co-ordinated manner." |
| Meanwhile German Chancellor Angela Merkel called on EU countries not to take steps at home that could cause problems for other member states. | Meanwhile German Chancellor Angela Merkel called on EU countries not to take steps at home that could cause problems for other member states. |
| The Irish and Greek governments have been criticised within the EU for deciding to act independently by guaranteeing to protect all savings deposited in their banks. | The Irish and Greek governments have been criticised within the EU for deciding to act independently by guaranteeing to protect all savings deposited in their banks. |
| 'Trial by fire' | 'Trial by fire' |
| UK Prime Minister Gordon Brown, meanwhile, called on European leaders to send the message that "no sound, solvent bank should be allowed to fail through lack of liquidity". | UK Prime Minister Gordon Brown, meanwhile, called on European leaders to send the message that "no sound, solvent bank should be allowed to fail through lack of liquidity". |
| EU leaders are under pressure to contain the financial contagion | EU leaders are under pressure to contain the financial contagion |
| He also said the meeting had agreed to ask the European Investment Fund to release 15bn euros ($21bn; £12bn) in loans to help small businesses operate. | He also said the meeting had agreed to ask the European Investment Fund to release 15bn euros ($21bn; £12bn) in loans to help small businesses operate. |
| The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, had earlier urged EU action, saying the financial crisis was presenting Europe with a "trial by fire". | The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, had earlier urged EU action, saying the financial crisis was presenting Europe with a "trial by fire". |
| He held talks with Mr Sarkozy before the EU leaders' meeting and said although the EU was a more complex organisation than the US, Europe needed to take "concerted collective action". | He held talks with Mr Sarkozy before the EU leaders' meeting and said although the EU was a more complex organisation than the US, Europe needed to take "concerted collective action". |
| Mr Strauss-Kahn said it had to be "indicated to the markets... that European countries will not react as every man for himself". | Mr Strauss-Kahn said it had to be "indicated to the markets... that European countries will not react as every man for himself". |
| He also said he would be scaling back his world economic growth forecasts. | He also said he would be scaling back his world economic growth forecasts. |
| Calls for European action followed the bail-out of both Bradford and Bingley in the UK and Fortis Bank by the governments of Belgium, Luxembourg and the Netherlands. | Calls for European action followed the bail-out of both Bradford and Bingley in the UK and Fortis Bank by the governments of Belgium, Luxembourg and the Netherlands. |
| But the president of the European Parliament has criticised the summit, warning that the leaders of Europe's four largest economies have no power to decide for the entire European Union. | But the president of the European Parliament has criticised the summit, warning that the leaders of Europe's four largest economies have no power to decide for the entire European Union. |