A number of the 15 nations currently using the euro will hold simultaneous cabinet meetings on Monday to enact the measures, said French President Nicolas Sarkozy. The rest of the 27-member European Union will have the opportunity to adopt the measures at a Wednesday meeting.

"The force of unity that we showed today is a fundamental element of confidence," said European Central Bank President Jean-Claude Trichet, but he added "there are still many things to do."

The measures adopted on Sunday include:

* Making it easier for banks to raise new capital by guaranteeing the banks' issuance of new medium-term debt.

* Rescuing "distressed" banks through recapitalization and other "appropriate" means. Banks aided through this means will be subject to a restructuring plan.

* A pledge to support banks by buying preferred shares. Banks that accept government money would be subjected to "additional restrictions".

* Urging regulators to relax "mark-to-market" accounting rules that require securities to be valued at their current price rather than the purchase price or potential price it could yield in the future.

The plan follows similar rescue packages announced last week by the UK, which committed €150 billion to help recapitalize banks, and the $700 billion rescue package in the U.S.

European officials did not release an estimate cost of the measures, but said each country will release figures for the measures they take individually.

Host President Sarkozy said the action is "not a gift to banks," but an interim measure needed to restore confidence in the markets. "States will have the possibility to guarantee the loans that banks take out, [and] guarantee them under different forms."

German Chancellor Angela Merkel, who along with Sarkozy called for co-ordinated action by the EU prior to the meeting, said the agreement will make the current crisis "more manageable."

"It will allow markets to start functioning again, that was our aim," she said, adding the agreement sends "a strong message to the markets."

As Germany's response to the crisis, it has developed a plan that will involve the creation of a special fund to provide equity capital worth up to €100 billion, the newspaper Handelsblatt reported. According to a German finance ministry spokesperson quoted by Reuters, Germany will publish details of its rescue package on Monday.

Similarly, France is expected to announce a rescue fund to the tune of €50 billion to €100 billion in order to protect the nation's banks by buying stakes in those threatened by failure, the New York Times reported, citing sources who worked on the plan.

Also on Sunday, the government of Norway announced plans to shore up bank liquidity, including the issue of up to 350 billion crowns ($57 billion) in government bonds. "This facility is tailored to the needs of Norwegian banks and in conformity with the G-7 statement on financial stability earlier this weekend," Prime Minister Jens Stoltenberg said in a statement.

The euro group's plan, based largely on the British model of recapitalization, is being received with cautious optimism by economists.

"The proof will be in the implementation. But judging by the limited information available late Sunday, the size and nature of the national plans suggest that they could finally make a difference," economists from Bank of America wrote in a client note.

"We expect no quick fix. But over time, the readiness of governments in the Eurozone to take decisive steps, and to learn from the British example, could help to ease the plight of the financial sector and mitigate the risk that the current recession could become even deeper and more protracted."

By Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it

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