European leaders vow to fight financial mayhem

By Ilona Wissenbach and Tamora Vidaillet

PARIS (Reuters) - European leaders vowed at the start of an emergency summit on Saturday to do what they could to fend off a financial crisis that snowballed out of Wall Street and is now hitting banks in Europe.

German Chancellor Angela Merkel, keen not to be turned into bankroller-in-chief as governments seek a joint response to the worst crisis since the 1930s, said those who caused the trouble must be made to help sort it out.

"The politicians have to take responsibility in this very difficult situation, but those who have caused the damage must contribute to the solution," she told reporters as she entered the summit at French President Nicolas Sarkozy's Elysee Palace.

Sarkozy invited the heads of government of Germany, Britain and Italy to a meeting that he hopes will restore confidence to the banking sector and an economy on the brink of recession in much of the developed world.

"I want the message to go out of this meeting today that no sound, sovereign bank should be allowed to fail for lack of liquidity," Prime minister Gordon Brown said on arrival.

"The signal will be very clear that every country represented here today will want to do whatever is necessary to secure the stability of the system and to ensure the safety of their hardworking families and businesses in each of our countries," he added.

The summit follows approval on Friday by the U.S. Congress of a $700-billion (396-billion-pound) bank bailout plan to tackle a crisis sparked by a housing market collapse and a surge in bad mortgage debt.

"My administration will move as quickly as possible, but the benefits of this package will not all be felt immediately," U.S. President George W. Bush said in a radio address.  Continued...