EU's Barroso urges global rethink of regulation

BRUSSELS (Reuters) - Europe and the world must rethink financial regulation and supervisory rules, including for hedge funds and private equity, once the credit crisis subsides, European Commission President Jose Manuel Barroso said on Tuesday.

Positive market reaction around the globe showed European Union countries were on the right track with their coordinated 2.2 trillion euro ($3,023 billion) rescue plan for banks adopted in emergency talks in Paris on Sunday, he said.

"We see light at the end of the tunnel but we are not there yet," Barroso told a news conference.

"Once we have put financial markets back on their feet, we must ensure that in the future they function properly for the benefit of citizens and businesses, rather than themselves," Barroso said.

"We must rethink regulatory and supervision rules for financial markets including banks ... hedge funds and private equity," he said, apparently reversing EU Internal Market Commissioner Charlie McCreevy's opposition to regulating hedge funds and private equity.

The 27 EU leaders meet in Brussels on Wednesday and Thursday to discuss their joint response to the crisis, which appears to have restored market confidence in the short term, as well as legislation to fight climate change and promote clean energy.

Barroso said the financial crisis was no reason for the EU to go back on its ambitious plans to combat global warming by reducing greenhouse gas emissions, reducing energy consumption and promoting alternative energy sources.

"This is not a luxury we now have to forego ... Global warming does not disappear because of the financial crisis," he said.

The EU should stick to its goals of reducing greenhouse gas emissions by 20 percent by 2020 from 1990 levels, saving 20 percent through energy efficiency measures and deriving 20 percent of power from renewable sources by 2020.

"Of course in a crisis, governments become more defensive," he said, adding that the EU should achieve those goals flexibly.

(Reporting by Ingrid Melander, writing by Paul Taylor, editing

by Dale Hudson)