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EU moves to reassure bank savers EU moves to reassure bank savers
(about 1 hour later)
European Union finance ministers have agreed to increase the guarantee for customers' bank savings accounts to at least 50,000 euros ($67,500; £37,000). European Union finance ministers have agreed to increase the guarantee for customers' bank savings accounts to at least 50,000 euros ($68,250; £38,900).
The ministers reached agreement at emergency talks on the financial crisis in Luxembourg.The ministers reached agreement at emergency talks on the financial crisis in Luxembourg.
The ministers also agreed to support big banks in trouble in order to protect the financial system. They also agreed to support big banks in trouble in order to protect the financial system.
"We have agreed to support systemic financial institutions," deputy German finance minister Joerg Asmussen said."We have agreed to support systemic financial institutions," deputy German finance minister Joerg Asmussen said.
Until the outbreak of the turmoil in the financial sector, most EU governments guaranteed consumer savings of up to 25,000 euros.Until the outbreak of the turmoil in the financial sector, most EU governments guaranteed consumer savings of up to 25,000 euros.
The ministers from the 27 member states hope their measures will bolster money markets after a day of panic saw huge share index losses in Germany, France and the UK. However, several countries wanted to raise the minimum guarantee even higher than 50,000 euros - to 100,000 euros. Countries such as Greece and Ireland have already issued blanket guarantees for savers.
Guaranteeing savings Bank fears
French finance minister, Christine Lagarde, who chaired the meeting, said: "We wanted to find a common position to strengthen our coordination - we have succeeded."
There's a mess in Europe too, because European banks were also seduced over the preceding few years into lending too much too cheaply to consumers and businesses Robert PestonBBC business editor Read Robert's blogInteractive map: How European governments have reactedBloomberg: Bail-out not enough
"We have reiterated our determination to guarantee the stability and solidity of the banking system, " she added.
The ministers from the 27 member states hope their measures will bolster money markets after a day of panic on Monday saw huge share index losses in Germany, France and the UK.
A $700bn US bank bail-out and moves by several EU states to help their banks have not quelled fears.A $700bn US bank bail-out and moves by several EU states to help their banks have not quelled fears.
European and Asian markets were volatile on Tuesday as investors worried global government action may not resolve the crisis.European and Asian markets were volatile on Tuesday as investors worried global government action may not resolve the crisis.
Banking stocks dragged European share markets lower initially, but by early afternoon most indices had reversed earlier falls to edge ahead slightly - the UK's main FTSE 100 index was up 1.2%, while France's Cac 40 was 1.5% higher.Banking stocks dragged European share markets lower initially, but by early afternoon most indices had reversed earlier falls to edge ahead slightly - the UK's main FTSE 100 index was up 1.2%, while France's Cac 40 was 1.5% higher.
Earlier Japan's Nikkei index had plunged more than 5% - shattering the psychological 10,000-point barrier for the first time in nearly five years - before recovering slightly to close down 3%. Rescue fund
Australia's financial market suffered before the country's central bank cut its official interest rate by 1%, prompting the country's main share index to close up 1.7%. Since late last week, Ireland, Germany, Greece, Austria and Denmark have declared separately that money held by ailing banks will be safe. Investors have endured a white-knuckle ride in recent weeks.
Share prices in China, Taiwan and South Korea also saw turbulent trading. Analysts say the move had angered fellow EU member states who feared it could prompt savers to transfer their money into guaranteed institutions.
On Wall Street on Monday, the Dow Jones index fell 8% before regaining some of its losses to end down 3.6%. Europe's fragmented response to the crisis has so far has done little to reassure investors, correspondents say.
President George W Bush said it would take some time for the rescue plan to restore confidence to the financial system.
'Apocalyptic tone'
There's a mess in Europe too, because European banks were also seduced over the preceding few years into lending too much too cheaply to consumers and businesses Robert PestonBBC business editor Read Robert's blogInteractive map: How European governments have reactedBloomberg: Bail-out not enough
Since late last week, Ireland, Germany, Greece, Austria and Denmark have declared separately that money held by ailing banks will be safe.
Analysts say the move has angered fellow EU member states who fear it could prompt savers to transfer their money into guaranteed institutions.
Luxembourg's Prime Minister Jean-Claude Juncker said no major financial institution would be allowed to fail.
Jean-Claude Trichet, president of the European Central Bank, added: "We will continue to provide monetary markets with all the liquidity they need for as long as it is necessary."
But Europe's fragmented response to the crisis so far has done little to reassure investors, correspondents say.
IMF warning
Across Europe, central banks have already offered more than $74bn in short-term loans to banks in an attempt to make cash available.Across Europe, central banks have already offered more than $74bn in short-term loans to banks in an attempt to make cash available.
European turmoil outweighed relief over the US bail-out, analysts said.
But while the idea of a European fund to rescue troubled banks has been floated, it has attracted too little support to go any further, says the BBC's economics correspondent Andrew Walker in Washington.But while the idea of a European fund to rescue troubled banks has been floated, it has attracted too little support to go any further, says the BBC's economics correspondent Andrew Walker in Washington.
He also says the financial crisis will come under the microscope at the International Monetary Fund meetings in Washington in the next week.He also says the financial crisis will come under the microscope at the International Monetary Fund meetings in Washington in the next week.
Its analysts will say the global economy has been sandbagged by high commodity prices, the housing slump and the growing financial crisis.
IMF economists have already warned of an increased risk of a severe and protracted economic downturn.
On Tuesday a banking reform bill is due to go before the UK parliament while German lawmakers are scheduled to hold an emergency session.