ANALYSTS VIEW: Analyst reaction to European bank plan

(Reuters) - Top European leaders holding an emergency meeting on the global financial crisis in Paris on Sunday rushed to craft a credible response before fearful world markets reopen, pledging to pump public money into banks.

According to a document circulated during the summit, two key things agreed by leaders were the commitments to provide capital and insure or directly buy into new debt issues.

Following are some economists' comments on the meeting:

ANALYST REACTION:

MARCO ANNUNZIATA, UNICREDITGROUP, LONDON

"EU policy-makers in Paris have risen to the challenge, and stolen the limelight from the G7 in Washington. They delivered a joint statement detailing concrete steps that will be debated in individual government meetings tomorrow in France, Germany, Italy and possibly other countries. The aim is to have most measures in place by the end of the week, including where legislative action is required."

"The measures address the key issues of recapitalization, liquidity and funding. Key steps include guaranteeing new medium-term bank debt and a suspension or weakening of mark to market."

"This announcement of concrete, decisive and well-targeted measures to be deployed simultaneously by individual governments should reassure markets. I see two risks: (1) there might be some disappointment on the lack of a guarantee on interbank lending -- some confusion on this in the press conference -- but markets should realize that funding and recapitalization will eliminate counterparty risk; (2) there will be some fear of "accidents" at cabinet meetings, after the precedent of the initial rejection of the TARP in the US."

"But overall what we have seen tonight is impressive, and deserves at the very least the benefit of the doubt -- after much hesitancy, European policy-makers are now racing ahead of the U.S. in their efforts to solve the crisis. The necessary degree of coordination has been agreed, and the actions will now come from (where) the real power lies, the national governments. In the coming week we should see some meaningful narrowing in Euribor-EONIA spreads, some strengthening of the EUR, and a less suicidal mood in equities."

PETER KENNY, MANAGING DIRECTOR, KNIGHT EQUITY MARKETS,

JERSEY CITY, NEW JERSEY

"You will see a reasonable market reaction to long-sought government intervention into markets. The nature of their problems are so enormous that there is only one backstop that can really deliver market calm and take the panic nature out of the sell-off, and that is the central banks working in a coordinated fashion.

"They're stepping up to the plate with all their fire power. It is literally a financial, economic call to arms.

"It is not going to be overnight but it is going to help a lot. It is going to take the edge of panic off market psychology.

"I think you may be able to find a rally in some of the more financial-intensive sectors."

JOHN MCCARTHY, VICE PRESIDENT OF FOREIGN EXCHANGE, ING