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EU Mini-Summit Seeks Response To Financial Crisis

France's Nicholas Sarkozy called for the Paris gathering.
Leaders of the EU's biggest economies are gathering for an emergency summit in Paris, where they will discuss the possibility of a coordinated response to the global financial and economic crisis.

European leaders are sharply divided over the desirability of any Europe-wide bailout package.

The mini-summit comes one day after the U.S. Congress backed a $700 bailout plan to shore up the American market.

The leaders of Germany, Britain, and Italy will be joined by the head of the European Commission, Jose Manuel Barroso, and the chief of the European Central Bank, Jean-Claude Trichet, at the urging of French President Nicolas Sarkozy.

They are looking for ways to contain the turmoil from a U.S.-born financial crisis that has spilled into Europe, causing economic slowdown across the continent.

The meeting takes place one day after the U.S. House of Representatives followed in the steps of the Senate and approved a bitterly contested bailout plan to shore up Wall Street. That plan was quickly signed into law by U.S President George W. Bush.

European Commission President Barroso has welcomed Washington's rescue plan, saying the United States has shown responsibility in tackling its crisis.

But participants at the Paris mini-summit were unlikely to discuss any similar bailout for Europe, as there are substantial disagreements over how to proceed.

British and German leaders have expressed skepticism over committing their taxpayers' money to any EU-managed plan. Instead, they have advocated a case-by-case -- and more importantly, state-by-state -- approach to troubled banks.

Germany has flatly rejected proposals to create a $416 billion EU emergency fund to rescue 27 key banks and financial institutions.

Absent a consensus on specifics, attendees in Paris were expected to stress the need to coordinate Europe's response to the crisis.

On the eve of the talks, Sarkozy called for greater European financial supervision, broader economic transparency, and caution against excessive risk-taking by financial institutions.

France has become the second European state -- after Ireland -- to see its economy tripped up since the U.S. woes spread, and Sarkozy has said people expect "resolute actions" to protect them.

France's minister for European affairs, Jean-Pierre Jouyet, said participants at the summit must agree on "intervening where and when it is necessary to prevent any systematic risk."

Several European states have already extended bailouts to crisis-stricken banks, including Britain's Bradford and Bingley, Belgian-Dutch Fortis, and Belgium's Dexia.

Just hours ahead of the gathering in Paris, Finnish Finance Minister Jyrki Katainen blasted the notion of such a summit excluding Europe's smaller economies.

"In my opinion it's a very bad idea," Reuters cited Katainen as telling national broadcaster YLE, adding that a monthly meeting of EU economics and finance ministers is due to take place on October 6 and 7. "If big countries and representatives of EU institutions like the head of the ECB and maybe someone from the Commission meet today and discuss amongst themselves,... it's not a good way to work. We're all in the same boat."

compiled from agency reports