Parties close ranks to confront credit crisis

David Cameron, walks through the convention centre after speaking on the current global financial crisis, at the Conservative Party annual conference in Birmingham on September 30, 2008.

BIRMINGHAM (Reuters) - Opposition parties pledged Tuesday to work with the government to counter the global financial crisis that has forced the nationalisation of two banks.

Chancellor Alistair Darling held talks with the economics spokesmen of the main opposition parties, the Conservatives and Liberal Democrats, to discuss how to respond to the financial storm.

"I made it clear that the Conservative Party stands ready to do whatever we can to help in this extremely difficult situation and bring some stability to the British economy," the Conservatives' George Osborne said after the meeting.

He said he offered Conservative support in winning approval for a new banking law, which the government plans to introduce when parliament returns from its summer recess next week.

The law will strengthen supervision and give regulators powers to step in when a bank is failing to seize its assets and save customers' deposits.

Liberal Democrat leader Nick Clegg said: "These exceptional times require a suspension of normal political hostilities and a rapid move towards a cross-party consensus on how we might prepare for the worst case scenario."

The Treasury declined comment on Darling's meetings with the opposition figures, but Brown said he welcomed the "support for what we are doing from the two (opposition) party leaders."

"We listen to what people are saying," he told Sky News.

The government has stepped in twice this year to nationalise mortgage lenders hit by the credit crunch -- Northern Rock in February and Bradford & Bingley this week.

BROWN CONFIDENT ON DEAL

The government also eased through a deal between mortgage lender HBOS and Lloyds TSB after a slump in HBOS's share price stirred fears the bank might fall victim to the credit crunch.

Brown said Tuesday he was confident the merger would go ahead despite a sharp drop in HBOS' share price Tuesday and market talk that Lloyds may reduce its offer by a quarter.

Conservative leader David Cameron, pointing to the U.S. Congress's rejection of a $700 billion (388 billion pound) bank bailout plan on Monday, told his party's annual conference in Birmingham he was ready to set aside party differences to help Brown.

Brown said he was confident "reason will prevail" on the proposed U.S. bailout, which he backs.

Brown's standing has jumped since he pledged, in his speech at the ruling Labour Party's annual conference last week, to do whatever was needed to ensure financial market stability.

Polls show voters still prefer Cameron to Brown -- but that in a crisis they would rather have Brown, the seasoned former finance minister who took over from Tony Blair last year.

A poll in the Independent newspaper Tuesday showed that 43 percent of voters trusted Brown to deal with a crisis and handle the economy, against 33 percent backing Cameron.

Labour now lags the Conservatives by about 10 points, but all four polls released since the prime minister spoke last week show the Conservative lead has halved.

Brown does not have to call an election until mid-2010.

(Additional reporting by Adrian Croft and Frank Prenesti)