Paris/Washington, October 12
European leaders in Paris today hoped to agree on a detailed plan to prevent market panic and stave off what the International Monetary Fund warned could be a global financial meltdown.

In Britain, banks were in crisis talks with the government and regulators which could see the government take multi-billion- pound stakes in several lenders.

Across the globe, Australia and New Zealand announced they would guarantee bank deposits.

The IMF said it backed a plan by the Group of Seven leading industrialised nations to stabilise markets.

It said bold action was needed to persuade banks to resume lending and bring an end to a spreading credit crunch that has pushed global stocks to a five-year low.

''Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown,'' IMF chief Dominique Strauss-Kahn said.

In Washington, US President George W. Bush met G7 economic chiefs and officials from the IMF and World Bank over Friday and Saturday, but they failed to agree on concrete measures to end the crisis.

''I'm confident that the world's major economies can overcome the challenges we face,'' Bush said, adding that Washington was working as fast as possible to implement a $700 billion financial bailout package approved a week ago.

Last week, the Standard & Poor's 500 index tumbled more than 18 per cent -- its worst week on record -- while European stocks plunged 22 per cent and Tokyo's Nikkei crashed 24 per cent on the week.

Coordinated interest rate cuts from central banks failed to soothe investors' nerves and credit markets remained logjammed.

The scene shifted from Washington to Paris today.

French economy minister Christine Lagarde said before leaving Washington the summit of euro zone leaders would go beyond talking remedies to ''put meat, muscles on the bones of that skeleton and to develop, follow up and execute upon it.''

French President Nicolas Sarkozy and German Chancellor Angela Merkel, meeting in France, said they had prepared a number of decisions to present at the meeting to try restore normal flows in blocked credit markets.

In an interview with Britain's Observer newspaper, British Prime Minister Gordon Brown said he would try to broker a Europe-wide bailout of banks modelled on Britain's intervention, saying the ''stakes could not be higher'' for jobs, mortgages and the future of the economy.

In London, big British banks were likely to announce their plans to recapitalise, a source familiar with the matter said.

The Sunday Times said Royal Bank of Scotland, HBOS, Lloyds TSB and Barclays could ask for a combined 35 billion pound lifeline.

The government could take seats on the boards of banks, a government source said.

The Sunday Times said the scale of the fund-raising could lead to trading at the London Stock Exchange being suspended to give the market time to digest the impact. The LSE downplayed that prospect.

Under Australia's plan, all deposits in the country's banks, building societies and credit unions, would be guaranteed by the government for the next three years, Australian Prime Minister Kevin Rudd told reporters.

The government would also guarantee term wholesale funding to local banks until global financial markets stabilised.

In India, mutual funds have asked the central bank (RBI) to lend them short-term cash via a repurchase facility, fund executives said.

In Dubai, the United Arab Emirates promised to protect banks from credit risks and guarantee bank deposits. The government of the Gulf Arab nation said it would pump sufficient liquidity into the system if needed and facilitate interbank lending. — Reuters