In a draft statement likely to be endorsed at the end of a two-day summit, the 27 EU leaders reiterated plans to set up a financial crisis cell which would act as an early warning system and revived a long-talked about plan to beef up Europe-wide supervision of cross-border finance groups.

'The European Council stresses the need to strengthen the supervision of the European financial sector, particularly cross-border groups, with a view to developing a coordinated supervision system at European level,' said the draft declaration.

Despite recent measures to steady stricken banks, a steep slump on global stock markets highlighted just how fragile confidence remains amid growing concerns that the world's biggest economies are threatened with recession.

The current crisis has exposed the limits of Europe's ability to oversee big cross-border financial groups, with supervision currently conducted mainly along national lines.

While acknowledging that more coordination was needed in Europe to supervise banks, EU leaders resisted growing calls for a European financial sector authority to be set up.

Instead, they called on national supervisors 'to meet at least once a month to exchange information,' according to the draft conclusions.

All 27 of the EU's leaders on Wednesday threw their support behind measures taken by members of the single currency eurozone to safeguard banks, which include plans for governments to guarantee over a trillion euros in interbank loans.

As the bloc struggles to confront the short-comings in its own oversight of banking groups, EU leaders also pushed for sweeping revamp of the international financial architecture.

'Europe will present an ambitious common vision. We do not want (the crisis) to start again,' French President Nicolas Sarkozy told journalists on Wednesday, after the first day of the summit.

'We want that consequences are drawn from what we know. We are really determined to go all the way on this overhaul,' he added.

Mr Sarkozy - whose country holds the EU presidency - said he would deliver the EU's message to US President George W. Bush when he and European Commission chief Jose Manuel Barroso hold talks at Camp David this weekend.

EU leaders are leading calls for an international summit, perhaps as soon as next month, to reshape the strained global financial system to avert future crises.

With the broader economy increasingly threatened by turbulence in the financial sector, they also want measures to support industry although there are divisions about a broader Europe-wide economic stimulus plan.

'Outside the financial sector, the European Council (the 27 leaders) underlines its determination to take the necessary steps to react to the slowdown in demand and the contraction in investment, and in particular to support European industry,' the draft conclusions said.

Meanwhile, the financial crisis appeared to be causing collateral damage to Europe's ambitious plan to tackle climate change, which were showing signs of unravelling over national concerns about its economic impact.

In the draft conclusions, the 27 heads of state and government agree that the climate change package should be introduced in a 'cost-effective manner... having regard to each member state's specific situation'.

The wording was added after Italian and Polish leaders on Wednesday threatened to veto the plan, concerned at its effect on their economies.

The concession allowed the EU 27 to stick to their timetable for reaching agreement on the deal in December. -- AFP