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European banks rescue plan agreed European banks rescue plan agreed
(10 minutes later)
European leaders meeting in Paris have agreed a plan to tackle the banking crisis, saying no big institution will be allowed to fail.European leaders meeting in Paris have agreed a plan to tackle the banking crisis, saying no big institution will be allowed to fail.
They pledged to guarantee loans between banks until the end of 2009, and said they would put money into them by buying preference shares.They pledged to guarantee loans between banks until the end of 2009, and said they would put money into them by buying preference shares.
French President Nicolas Sarkozy said they were taking unprecedented steps.French President Nicolas Sarkozy said they were taking unprecedented steps.
World governments have been racing to throw banks a lifeline before the major markets re-open on Monday.World governments have been racing to throw banks a lifeline before the major markets re-open on Monday.
News of the rescue plan came from Mr Sarkozy - the current European Union head - after hours of talks between leaders of the 15 countries in the Euro single currency zone.News of the rescue plan came from Mr Sarkozy - the current European Union head - after hours of talks between leaders of the 15 countries in the Euro single currency zone.
UK Prime Minister Gordon Brown - not a member of the eurozone club - also attended parts of the talks.UK Prime Minister Gordon Brown - not a member of the eurozone club - also attended parts of the talks.
Britain announced a similar plan last week.Britain announced a similar plan last week.
Mr Sarkozy said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares.Mr Sarkozy said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares.
He said governments in Germany, France and Italy among others would be presenting their individual plans on Monday, within the agreed framework.He said governments in Germany, France and Italy among others would be presenting their individual plans on Monday, within the agreed framework.
"The crisis has over the past few days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach," he said."The crisis has over the past few days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach," he said.
Mr Sarkozy said the guarantees would be at commercial rates, and he stressed that what he called defective managers would be removed - and rash shareholders would not benefit from the public intervention.Mr Sarkozy said the guarantees would be at commercial rates, and he stressed that what he called defective managers would be removed - and rash shareholders would not benefit from the public intervention.
He said the plan addressed all aspects of the financial crisis. However, he did not say how much it would cost.He said the plan addressed all aspects of the financial crisis. However, he did not say how much it would cost.
Analysts say sheer nervousness has been a big factor in the recent share price falls.
But European Commission president Jose Manuel Barroso - also at the talks - said the plan would end "the excessive pessimism of the markets."
"We have taken the right course for Europe, for our businesses and our citizens," he said.