UPDATE 1-France wants 300 bln eur EU rescue package-source

(Adds detail, reaction)

By Matthias Sobolewski

BERLIN Oct 1 (Reuters) - France plans to propose at a meeting of big European Union countries this weekend that the bloc pursue a 300 billion euro ($424.4 billion) rescue package for its financial sector, a European government source said on Wednesday.

"France will propose at the Saturday meeting a European rescue plan with a volume of 300 billion euros," the source, requesting anonymity, told Reuters.

The French Finance Ministry declined to comment on the reported plan. "We will make no comment on that," a Finance Ministry spokesman said.

News of the possible plan lifted U.S. bank shares.

British, German, French, Italian leaders and the head of the European Commission are due to meet in Paris on Saturday to discuss Europe's response to the global financial crisis.

The European government source also told Reuters that France planned to suggest that EU countries contribute 3 percent of their gross domestic product (GDP) to the rescue plan.

Earlier, French Economy Minister Christine Lagarde told Germany's Handelsblatt newspaper in an interview to be published on Thursday that France planned to discuss a rescue fund for banks with its European partners, but did not specify how big it might be.

"We are in agreement within the EU that we need to support the financial sector. Then the question arises: do we need a European rescue fund to save banks? Right now this is just an idea. We need to talk about it," she told the paper.

"This will definitely be a theme on Saturday," she added, referring to the planned meeting in France.

The German Finance Ministry said Berlin "completely disagrees" with the reported French proposals.

A spokesman for British Prime Minister Gordon Brown said: "We are not going to give a running commentary on what officials may or may not be discussing in Paris.

The European Commission declined comment.

(Additional reporting by Paris, London bureaus)

(Writing by Noah Barkin and Madeline Chambers; Editing by Ron Askew)