Europe's leaders meeting at an economic crisis summit in Paris have pledged that no major financial institution will be allowed to collapse.

They also pledged to guarantee loans between banks on a temporary basis, in order to address the liquidity crisis.

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World governments have been racing this weekend to throw banks a lifeline before markets reopen on Monday.

French President Nicolas Sarkozy - the current European Union head - said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares.

He said governments in Germany, France and Italy among others would be presenting their individual plans on Monday.

Mr Sarkozy said the guarantees would be at commercial rates, and he stressed that what he called defective managers would be removed - and rash shareholders would not benefit from the public intervention.

(BBC)

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