Europe governments go their own way on crisis

Though Europe's officials appeared to be paying lip service to the need for working together, they continued to make key announcements on deposits on a go-it-alone basis.

France, which holds the rotating leadership of the European Union, said its 27 governments have each pledged to take "all necessary measures to ensure the stability of the financial system" but no joint action was forthcoming, fueling the belief that the crisis would be handled differently by each country.

Germany's Finance Minister Peer Steinbrueck made clear his government's opposition to the idea that the euro zone's single largest economy should put up money to prop up institutions outside his country.

He said Monday that he and Chancellor Angela Merkel were considering creating a "shield" that would protect the country's entire financial sector, and that a Europe-wide shield or bailout was out of the question. "The chancellor and I reject a European shield because we as Germans do not want to pay into a big pot where we do not have control and do not know where German money might be used," he said in a separate interview with WDR 2 radio.

Germany deepened the sense that events were beginning to run out of control when German Chancellor Angela Merkel said on Sunday that her government would guarantee all private bank savings and CDs held in the country. "We want to tell people that their savings are safe," she said.

Iceland and Denmark followed Monday with a deposit guarantee, in the former's case only once trading in the shares of six of its banks had been suspended.

Markets responded to the disarray by sinking rapidly, following selloffs in Asia. Russia shut down both its stock markets after they fell more than 15 percent.

At the close, Germany's DAX was down 410.02, or 7.1 percent, at 5,387.01, while the FTSE 100 index in Britain was 391.06 points, or 7.9 percent, lower at 4,589.19. The worst performing major European index was France's CAC-40, which shed 368.77 points, or 9.0 percent, to end at 3,711.98--its worst performance since it was initiated 20 years ago.

Wall Street took its cue from Europe, and the Dow Jones industrials closed down 369.88 points, or 3.6 percent, at 9,955.50, amid growing fears that the credit crisis is spreading around the world.