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Europe backs off of U.S.-style economic rescue plan

But EU leaders did agree to begin rewriting European accounting regulations later this month.

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The leaders of Europe's largest economies on Saturday vowed to "respond with one voice" to the global financial crisis. But a one-day summit in Paris did not produce a $300 billion rescue plan, similar to the $700 billion US rescue plan, or any other far-reaching plans to reform Europe's struggling banking sector.

Instead, they chose a much more cautious approach.

France had suggested a multibillion-dollar European Union-wide government bailout plan, but backed off after Germany said banks must find their own way out.

Leaders did agree to begin rewriting European accounting regulations later this month in an effort to reduce the financial losses that banks are currently forced to write off.

They also agreed to propose a so-called "college of regulators" that would monitor international banks with locations in more than one European country.

"They were trying to stop public panic," says Gerhard Illing, research director at the Institute for Economic Studies in Munich. "From that standpoint, I was very encouraged by the meeting."

But leaders left unanswered questions on the extent to which European countries should guarantee bank deposits, and whether any limits should be placed on bank lending practices.

In Berlin, the German government held crisis talks after the collapse of a ballyhooed ¤35 billion (US$48.4 billion) bailout of Hypo Real Estate AG, the country's second-biggest property lender.

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