Spain to boost deposit guarantee, create fund

MADRID (Reuters) - Spain will boost its guarantee for deposits in its banks to 100,000 euros and set up a 30 billion euro fund to buy assets from banks and keep credit flowing to the economy, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

"If there is anywhere Spaniards can know their savings are safe it's in Spanish banks," Zapatero told a news conference, announcing a guarantee double a minimum agreed at a European finance ministers' meeting in Luxembourg hours earlier.

The government fund, which can be extended to 50 billion euros and will not show up in budget accounts, will buy assets from banks in order to ensure they keep lending, Zapatero said, adding that it was not a bank bailout.

"The government isn't going to buy toxic assets, but healthy assets," he said.

"The fund will buy assets from financial institutions, in a voluntary manner on their part, using market criteria, Spanish assets of maximum quality, in order to guarantee over a sufficient period of time that financing makes its way to companies and citizens," Zapatero said.

(Reporting by Ben Harding and Jason Webb; Editing by Victoria Main)