France to host Saturday EU summit on crisis

France's President Nicholas Sarkozy, who has pledged to protect his country's banks and depositors, denied that the leaders would consider a costly Europe-wide bank protection fund. But he sought to quell fears at home about a credit crunch by announcing a 22 billion euro ($30.6 billion) loan deal for small businesses.

Europe welcomed the approval in the U.S. Senate of a $700 billion financial industry bailout. Lawmakers' rejection of an earlier version of the bailout had sent markets into a nosedive.

"We need a global effort to inject confidence in the financial markets and the United States, of course, have a major responsibility," European Commission President Jose Manuel Barroso said Thursday, welcoming the passage.

But officials indicated a U.S.-style bailout fund for Europe will not be on the agenda of the Saturday summit bringing together France, Germany, Britain and Italy and to be attended by top European officials including Barroso.

The summit's host, French President Sarkozy, on Thursday denied France was backing the creation of a special fund to rescue any crisis-hit European banks--a day after the French finance minister floated the idea. Some reports put a euro300 billion ($422 billion) price tag on it. The suggestion was swiftly rejected by Germany.

"I deny both the price and the principle," Sarkozy said Thursday.

Later, Sarkozy announced that the state would make available 22 billion euros ($30.6 billion) and earmark it for small business loans. The measure comes amid growing fears among French households and companies about tightening credit.

The French president's office said the Saturday summit would prepare the EU members of the Group of Eight for broader talks on the financial crisis with the club of leading industrialized nations. No meeting of the full G-8 has been announced, and Sarkozy's office did not further elaborate.

Sarkozy has pushed for a global summit on the crisis, saying capitalism must be restructured to better adapt to a new era.