PARIS - EUROPEAN leaders were to meet over the weekend in France in the latest bid to forge a common response to the global banking crisis, moving closer to a British-style plan of partial nationalisation.

French President Nicolas Sarkozy and German Chancellor Angela Merkel were to hold talks on Saturday at General Charles de Gaulle's graveside in Colombey-les-deux-Eglises and on Sunday the leaders of all 15 eurozone members will gather in Paris.

The heads of the European Union's four biggest economies - Britain, France, Germany and Italy - met a week ago but Ms Merkel and Mr Sarkozy were split over the need for a common plan.

However, after a week of economic turmoil and plunging stock markets, and crisis talks on Friday between the finance ministers of the G7 industrial powers, the single-currency bloc has agreed to try once more to coordinate a response.

After the G7 talks in Washington, US Treasury Secretary Henry Paulson said his government was ready to invest directly in banks for the first time since the Great Depression in a bid to restore confidence.

This move followed the decision by Britain's Prime Minister Gordon Brown to guarantee inter-bank lending and to offer to take stakes in some of the country's biggest banks in a programme of partial nationalisation.

Europe, after reluctance in particular from Ms Merkel's Germany, now seems likely to follow London down this route, which bankers hope will restart frozen lending between banks and pump vital liquidity into financial institutions.

On Friday, the German daily Die Welt reported that Germany was working on a British-style plan, and a senior European offical said that Mr Brown's idea was a 'good one' and would be discussed by the eurozone 15.

'It would be smart to follow the British example at the European level,' he said, speaking on condition of anonymity so as not to pre-empt the summit.

'I spoke to Madame Merkel and I think she's open to a European decision.'

Under the British programme, unveiled on Wednesday, 50 billion pounds (S$129 billion) of taxpayers' money has been made available to buy shares in the country's banks.

Across the Atlantic, Mr Paulson has a 700-billion-dollar (S$998 billion) pot with which to act since Congress approved his bail-out plan, initially focused on buying out bad loans or so-called 'toxic assets' from banks in difficulty.

Under a five-point G7 'action plan' announced on Friday, economic powers will ensure banks 'can raise capital from public as well as private sources in sufficient amounts to re-establish confidence'.

Ms Merkel and Mr Sarkozy were to hold their talks in Colombey, the village east of Paris that hosted the famous summit between their predecessors De Gaulle and Konrad Adenauer 50 years earlier, on Saturday afternoon.

The leaders were to give a news conference at 3pm (1300 GMT).

On Sunday, Ms Merkel and Mr Sarkozy and their 13 colleagues from the other members of the single-currency bloc will hold a crisis summit in Paris.

Some of the eurozone leaders were annoyed at being locked out of last week's talks, and Spain's Prime Minister Jose Luis Rodriguez Zapatero had called for a full meeting of members on Friday when he visited Mr Sarkozy.

The president of the European Commission Jose Manuel Barroso and the chairman of the European Central Bank Jean-Claude Trichet have also been invited to Sunday's meeting at 5pm (11 pm Singapore time) in the Elysee Palace. -- AFP