EU backs bank rescues, Denmark to inject capital

* EU says France improves terms of bank aid plan

* France says to pay first aid tranche in days

* Denmark to inject capital into banks

(Adds comments from Elysee Palace and source close to Lagarde)

By Mark John and Bate Felix

BRUSSELS (Reuters) - The European Commission approved France's bank rescue scheme on Monday and said it expected similar deals with Germany, Austria and others in coming days, signalling an end to a weeks-long standoff with governments.

The Commission decision came as Denmark became the latest country to announce support for its banks aimed at allaying the worst credit crunch since the Great Depression, but said it was not considering any move to nationalise financial institutions.

Sweden said the new guidelines from the EU executive on how authorities should tailor aid to banks, intended to avoid further wrangling with governments, went some way in the effort to bolster the financial sector but were still insufficient. [nSAT005922]

EU Competition Commissioner Neelie Kroes said she had not compromised strict EU aid rules under political pressure, saying France had tightened the terms under which banks must pay back aid and stressing Germany needed to make "minor changes" to secure approval for support to Commerzbank (CBKG.DE). [nL8734165]

"You will see that as far as state aid rules are concerned, no concessions have been made," she told a news conference.

The Commission also said it expected shortly to ease rules for state aid in general -- notably by increasing the threshold under which it had to be notified of such schemes.

REAL ECONOMY PLEDGE

A major bone of contention has been the rate at which fundamentally healthy banks caught up in the credit crunch would be made to pay for any state aid, with the Commission demanding higher rates than those proposed by national governments.

Details of the agreement with Paris showed a compromise after weeks of haggling over the terms of the support, with the Commission saying the repayment rate would be fixed for the first five years and be variable afterwards.

"The remuneration, which will average about 8 percent, will reflect the degree of solvency of each beneficiary bank," the Commission said in a statement.

Eight percent was in line with the rate sought by Paris. In return, the Commission said France had offered improved incentives for the early repayment of state capital and extra safeguards to ensure bank lending went to the real economy.