The New Nation - Internet Edition

AFP, London

The government's massive bank rescue plan was broadly welcomed Thursday, as Prime Minister Gordon Brown urged European counterparts to follow suit to help begin thawing the global credit freeze.

The government announced an 500-billion-pound package Wednesday that involved a possible part-nationalisation of several of Britain's main banks and a guarantee of inter-bank lending, and provided short-term funds for banks. At the same time Brown wrote to other European Union (EU) leaders -- who will meet for a regular summit in Brussels next week -- suggesting that if it were implemented in a coordinated way it could unblock frozen credit markets. "This is an issue which affects us all. A concerted approach with national schemes t would address this problem," he wrote in a letter to French President Nicolas Sarkozy, who currently holds the EU presidency.

Britain's opposition parties have backed the plan, with the Conservatives offering "constructive support for the package" while the Liberal Democrats said they were behind the government's proposals.

The plan was also welcomed by the country's newspapers despite its "eye-wateringly expensive" price tag, with the right-of-centre Times hailing it as an "intelligent and measured response to the financial crisis" while the right-wing Daily Telegraph said it put the government "on the front foot".

While the part-nationalisation implied by the government share-purchase proposal was hard to swallow, the Telegraph said "desperate times require desperate measures. When a blaze in your home is extinguished, it is churlish to complain about water damage".

London's FTSE 100 index of leading shares opened 1.48 percent higher Wednesday, after shedding over five percent a day earlier as traders brushed off co-ordinated interest rate cuts by major central banks around the world.

As part of the package, the government is making 50 billion pounds available to buy preference shares in banks, along with 200 billion pounds in short-term loans and another 250 billion to guarantee lending between banks.

The reluctance of banks to lend to each other is at the centre of the current global crisis.

In his letter to Sarkozy, copied to other EU leaders and the European Commission, Brown urged his counterparts to follow Britain's example, arguing that a "concerted international approach" was needed.

"The market for medium term funding is currently frozen across the globe, with potentially serious economic consequences," Brown wrote in the letter, obtained by French newspaper Le Monde and seen by AFP.

"Our scheme aims to restart the market by restoring confidence that loans to financial institutions will be repaid."