EU leaders to study crisis plan in Paris
PARIS (Reuters) - Leaders of euro zone countries hold an emergency meeting in Paris on Sunday hoping to agree on specific, pan-European measures to prevent market panic from triggering the most severe global downturn in decades.
Government officials have suggested action rather than talk could emerge from the first such gathering of the so-called Eurogroup, hastily arranged by President Nicolas Sarkozy after stock markets around the world plunged last week.
The meeting of the 15 countries which use the euro as their currency comes on the heels of a G7 summit of rich nations in Washington which offered no concrete, collective action but promised to do whatever was needed to unfreeze credit markets.
British Prime Minister Gordon Brown, whose country is not in the euro zone, will also meet Sarkozy on Sunday and a French official said the Eurogroup will likely use a rescue package unveiled by London last week as its reference point.
Speaking just before leaving Washington overnight, French Economy Minister Christine Lagarde said the Eurogroup would go beyond talking about remedies to "put meat, muscles on the bones of that skeleton and to develop, follow up and execute upon it."
Lagarde said leaders needed to announce "detailed implementation measures as quickly as possible and before the opening of markets if necessary."
Sarkozy and German Chancellor Angela Merkel, who met in France on Saturday, said they had prepared "a certain number of decisions" to present at a European summit to try to restore normal flows in blocked credit markets.
LEADERSHIP QUESTIONMARKS
Sarkozy will meet Brown, European Central Bank President Jean-Claude Trichet and European Commission President Jose Manuel Barroso at 3.30 p.m. (9:30 a.m. EDT), before the summit of euro zone leaders kicks off 90 minutes later.
Britain's capital London is the largest financial center in Europe and government sources said Brown had also been invited to sit in on part of the Eurogroup discussions.
Britain's rescue plan makes available 50 billion pounds ($86 billion) of taxpayers' money for injection into its banks and, crucially, calls for underwriting interbank lending, which has all but frozen around the globe.
In an interview with the Observer newspaper on Sunday, Brown said he would try to broker a Europe-wide bail-out of banks modeled on his plan, warning that the 'stakes could not be higher' for jobs, mortgages and the future of the economy."
The Sunday Times newspaper said Britain will launch its biggest retail bank rescue on Monday when the four largest, HBOS, Royal Bank of Scotland, Lloyds TSB and Barclays, ask for a combined 35 billion pound ($60.5 billion) lifeline.
Other countries are also stepping up their game, with Australia and New Zealand guaranteeing bank deposits.
On Saturday, media reports said Germany was readying a rescue package that could be worth up to $549 billion, including the injection of equity capital worth "double digit" billions into its banks and guarantees for interbank lending.
Still, question marks over the effectiveness of global efforts remained.
Dutch Finance Minister Wouter Bos criticized the G7 response to the crisis, saying on Saturday that while there was unity over the goals, there was nothing in the final statement from Washington about the instruments that would be used.
Bos lamented a lack of leadership and said the International Monetary Fund should play a leading role in finding solutions.
(Additional reporting by James Mackenzie in Washington; Editing by Angus MacSwan)
