Crisis deepens, EU finance mins meet to plan rescue

BAILOUT TIME: European nations now feel the heat of a global meltdown

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New Delhi: It is destination Luxembourg for the finance ministers of European economies.

After the US bailout late last week of its battered banking sector, it's Europe's turn to look for a solution to the global financial crisis.

The fiministers will meet for two days to thrash out plans to bailout their countries from the deepening global crisis.

The leaders of UK, France, Germany and Italy have asked the European Union for greater freedom to tackle the emergency.

The global credit crunch deepened in Europe even as the leaders of these countries pledged to bail out troubled banks and to protect depositors.

Europe's most powerful leaders had opened the way on Saturday for EU governments to breach deficit limits.

The EU leaders also accepted that the financial crisis was so severe they could waive their usual strict application of budget rules.

The Euro which had weathered the storm well until now, slid to a 13-month low against the dollar as the credit crisis spread outside the U.S.

This prompted investors to opt for less risky investments as Asian stocks fell for a third day, led by financial companies.

Investors doubt the scattered European response to the financial crisis and the $700 billion US bank bailout could prevent a global recession and keep pace with a fear-driven market.

Germany offered a blanket bank deposit guarantee as it clinched a deal to rescue lender Hypo Real Estate.

Officials across the globe are scrambling to contain the fallout from the deepest financial crisis since the 1930s.

Leaders of Europe's four largest economies, Germany, Britain, France and Italy are attempting to create a way to combat the crisis that could otherwise escalate to mirror the great depression of the 1930s.

(With inputs from Reuters)