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EU chiefs confront markets crisis EU chiefs confront markets crisis
(10 minutes later)
The 15 eurozone leaders are meeting in Paris to try to establish a common front to tackle the financial crisis.The 15 eurozone leaders are meeting in Paris to try to establish a common front to tackle the financial crisis.
They are joined by British PM Gordon Brown, who wants them to adopt similar measures to his bank rescue plan.They are joined by British PM Gordon Brown, who wants them to adopt similar measures to his bank rescue plan.
According to a draft statement seen by the AFP news agency, the leaders plan to guarantee loans between banks.According to a draft statement seen by the AFP news agency, the leaders plan to guarantee loans between banks.
Banks' unwillingness to lend to each other has been the key problem of the credit crunch and it is hoped that loan guarantees will get them lending again. Banks' unwillingness to lend to each other has been the key problem of the credit crunch and it is hoped that loan guarantees will solve it.
Money lent for up to five years would be guaranteed but the banks would be charged at commercial rates for the service.Money lent for up to five years would be guaranteed but the banks would be charged at commercial rates for the service.
The draft statement also says that the eurozone leaders are determined not to let any major financial institutions fail and will step in to provide extra capital to failing banks if necessary.The draft statement also says that the eurozone leaders are determined not to let any major financial institutions fail and will step in to provide extra capital to failing banks if necessary.
A member of the French government has already said that the French cabinet will hold a special session on Monday to approve a bill offering state guarantees and recapitalisation to banks in trouble.A member of the French government has already said that the French cabinet will hold a special session on Monday to approve a bill offering state guarantees and recapitalisation to banks in trouble.
Several other countries also announced steps to protect their banks and depositors on Sunday.
  • Portugal's finance minister announced a 20bn euro ($27bn; £16bn) state guarantee for banks.
  • Norway is to borrow 41bn euros to pay for measures to provide extra cash to financial markets.
  • Australia has agreed to guarantee all deposits in the banks, building societies and credit unions for the next three years.
  • New Zealand is guaranteeing all retail bank deposits for two years.
Several other countries also announced steps to protect their banks and depositors on Sunday.
  • Portugal's finance minister announced a 20bn euro ($27bn; £16bn) state guarantee for banks.
  • Norway is to borrow 41bn euros to pay for measures to provide extra cash to financial markets.
  • Australia has agreed to guarantee all deposits in the banks, building societies and credit unions for the next three years.
  • New Zealand is guaranteeing all retail bank deposits for two years.
The British rescue plan, which was announced last week, involves making £50bn ($85bn) available to banks as extra capital, having £200bn available for short term loans from the Bank of England and offering £250bn of loan guarantees for banks lending to each other. The British rescue plan, which was announced last week, involves making £50bn ($85bn) available to buy stakes in major banks, another £200bn for short term loans from the Bank of England and offering £250bn of loan guarantees for banks lending to each other.
The French plan sounds similar, although the details are not yet clear.The French plan sounds similar, although the details are not yet clear.
"We need a law to put in place a state guarantee and an organ that will be charged with raising funds to help banks deal with their need to recapitalise," said Gilles Carrez, a senior member of the parliamentary finance committee."We need a law to put in place a state guarantee and an organ that will be charged with raising funds to help banks deal with their need to recapitalise," said Gilles Carrez, a senior member of the parliamentary finance committee.
Common planCommon plan
As the UK has not adopted the euro, Mr Brown had not been due to take part in the meeting of eurozone leaders.As the UK has not adopted the euro, Mr Brown had not been due to take part in the meeting of eurozone leaders.
But a Downing Street spokesman said the French president had invited him to attend part of it.But a Downing Street spokesman said the French president had invited him to attend part of it.
He is understood to have addressed his European counterparts but then left while an agreement was being discussed.He is understood to have addressed his European counterparts but then left while an agreement was being discussed.
The heads of the EU's four biggest economies - Britain, France, Germany and Italy - held a first crisis summit last week, but were split over the need for a common plan.The heads of the EU's four biggest economies - Britain, France, Germany and Italy - held a first crisis summit last week, but were split over the need for a common plan.
Ahead of Sunday's eurozone meeting, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they would present a number of proposals to ease the credit freeze that has caused the collapse of several leading international banks.Ahead of Sunday's eurozone meeting, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they would present a number of proposals to ease the credit freeze that has caused the collapse of several leading international banks.
But after meeting in Paris on Saturday, the two leaders said the summit would not result in a joint financial rescue fund for Europe, along the lines of a recent $700bn rescue by the US government.But after meeting in Paris on Saturday, the two leaders said the summit would not result in a joint financial rescue fund for Europe, along the lines of a recent $700bn rescue by the US government.
Late on Friday, the architect of the US scheme, Treasury Secretary Henry Paulson, said the US planned to invest directly in banks for the first time since the 1930s, following a similar UK programme of partial bank nationalisation. Late on Friday, the architect of the US scheme, Treasury Secretary Henry Paulson, said the US planned to invest directly in banks for the first time since the 1930s, following the UK programme of partial bank nationalisation.