EU chiefs confront markets crisis

The 15 eurozone leaders are to meet in Paris to try to establish a common approach to the financial crisis.

France's finance minister said their meeting would "follow up and execute upon" a five-point plan agreed by the group of seven industrialised nations.

It comes amid reports that France is planning to introduce a bank rescue scheme on Monday.

The plan appears to be similar to the UK plan, involving recapitalisation as well as loan guarantees.

'Systemic meltdown'

"We need a law to put in place a state guarantee and an organ that will be charged with raising funds to help banks deal with their need to recapitalise," Gilles Carrez, a senior member of the parliamentary finance committee told AFP news agency.

Also on Sunday, Portugal's finance minister announced a 20bn euro ($27bn; £16bn) state guarantee for banks.

Earlier, the head of the International Monetary Fund (IMF) warned the world's financial system was teetering on the brink of systemic meltdown.

Dominique Strauss-Kahn said rich states had failed to restore confidence, but endorsed the new action plan by the G7 group and said the IMF was ready to lend to countries in dire need of capital.

Both officials were speaking in Washington after meetings of the IMF and G7.

Intensifying concerns

France, Germany and Italy have already signed up to some key objectives agreed by the G7 on Friday.

Many commentators welcomed the aims but called for a rapid move to fill in the details, says the BBC's economics correspondent Andrew Walker.

Ahead of Sunday's eurozone meeting, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they would present a number of proposals to ease the credit freeze that has caused the collapse of several leading international banks.

But after meeting in Paris on Saturday, the two leaders said the summit would not result in a joint financial rescue fund for Europe, in the model of a recent $700bn rescue by the US government.

Chancellor Merkel said governments must "redirect the markets so they serve the people, and not ruin them".

UK Prime Minister Gordon Brown is due to hold talks with Mr Sarkozy ahead of the eurozone summit, having promised Britain will "lead the way" through the global financial crisis.

As the UK has not adopted the euro, Mr Brown had not been due to take part in the meeting of eurozone leaders but a Downing Street spokesman said the French president had invited him to attend part of it.

The heads of the EU's four biggest economies - Britain, France, Germany and Italy - held a first crisis summit last week, but were split over the need for a common plan.

Meanwhile the British finance minister, Alastair Darling, has said more information about UK proposals will be made public soon.

His announcement came amid reports the British government was about to take substantial stakes in several banks.

Analysts say another week of plunging stock markets has focused minds and the real test of this weekend's scramble by world leaders to shore up the international financial system will come once markets reopen on Monday.

In a separate development, Australia has announced it will guarantee all bank deposits for three years.

Prime Minister Kevin Rudd said his government would also guarantee wholesale funding to Australian banks in an attempt to shore up the ailing financial institutions