The New Nation - Internet Edition

BBC, London

A number of European leaders are due to discuss the global economic crisis at an emergency summit in Paris later. UK Prime Minister Gordon Brown and the leaders of France, Germany and Italy are all due to attend.

They are expected to meet the president of the European Commission and European Central Bank chief.

The meeting was set up to try to forge a common approach but there have already been considerable disagreements about any sort of EU bail-out package.

French President Nicolas Sarkozy has said he hopes the discussions will lead to a world summit later this year.

Co-ordinated response

But there are growing divisions in Europe about where the limits are when it comes to regulating the money markets and bailing out failing banks and financial houses.

The scheduled four-hour meeting on Saturday will welcome Washington's approval of a $700bn (£397bn) rescue package planned to restore confidence in Wall Street.

European leaders are keen to agree a co-ordinated response ahead of next week's meeting of the G8 finance ministers and central bank governors in Washington.

But plans for a 300bn euros (£237bn, $417bn) EU-wide rescue similar to the US Congress plan have been denied by Mr Sarkozy's office.

Calls for European action follow the bail-out of both Bradford and Bingley, which cost the UK government around £14bn, and Fortis Bank, which cost the governments of Belgium, Luxembourg and the Netherlands around £9bn.

Only the Dutch appear to support getting the European Union's 27 countries to contribute to a £250bn emergency fund.

Such a fund would be used only when one of the member states' key banks or financial institutions faced serious trouble.

Scepticism

The four leaders, however, are expected to look at how they can encourage confidence by strengthening co-operation within Europe and ensuring the financial markets function properly in the future.

The BBC's Alistair Sandford said: "France wants countries to agree to intervene where necessary to protect European banks.

"But after the recent divisions, it is far from clear what will emerge." Germany has made its opposition to any co-ordinated European bail-out plan known ahead of the meeting.

Gordon Brown is also sceptical of the need for any Europe-wide plan.

BBC Europe correspondent Mark Mardell said Downing Street prefered the case-by-case, nation-by-nation solutions that have been happening so far.

The president of the European Parliament, Hans-Gert Pöttering, has criticised the summit, warning that it has no power to make decisions for the entire EU.

Battle to buy Wachovia heats up

The battle for troubled US bank Wachovia has heated up with two rival suitors now competing for the firm.

Wells Fargo has announced it is set to buy Wachovia for $15.1bn (£8.5bn).

This scuppered an earlier US government-backed rescue deal in which Citigroup would buy Wachovia's banking arm for $2.2bn.

Citigroup has now objected, saying the new agreement breached its exclusive acquisition rights and has demanded that it be called off.

Exclusive agreement

But a few days later it was courted by another suitor Wells Fargo.

Wells offered to buy all of Wachovia for much more money, and so Wachovia walked away from its agreement with Citi.

This has clearly angered Citigroup, which said it had nearly completed its own deal with Wachovia.

This would have been overseen by the Federal Deposit Insurance Corporation (FDIC), and would have included government help.

"Wachovia's agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia," Citigroup said in a statement.

The fight for Wachovia has come amid a crisis that has seen investment bank Lehman Brothers go bust, and the failure of giant mortgage lender Washington Mutual.

Financial difficulties

Cassandra Toroian, chief investment officer at Bell Rock Capital added: "For Citigroup, this is a real losstthis was a deal that was going to save them as much as it was saving Wachovia."

Wachovia's financial difficulties stemmed from its 2006 purchase of mortgage lender Golden West for $25bn at the height of the then US housing boom, according to analysts.

Wachovia's chief executive, Robert Steel, said: "Today's announcement creates one of the strongest financial firms in the world."

"This deal enables us to keep Wachovia intact and preserve the value of an integrated company," he said.

Shareholder questions

Wells Fargo said it expected its earnings to benefit from the new agreement within a year, but some question the attraction of the deal for Wells' shareholders.

Nancy Bush, analyst at Nab research said: "I think it's a more elegant solution for Wachovia shareholders."

But she added: "If I were a Wells Fargo shareholdertI wouldn't be so happy. Wells is going to have to go to the capital markets at a time when it's not so easy to raise capital." The deal still has to be approved by shareholders.