EU executive won't be rushed into new regulation

By Huw Jones

BRUSSELS (Reuters) - Calls for the European Union to step up its regulatory response to the financial crisis grew louder on Tuesday but the bloc's executive is in no mood to rush.

The European Commission has the sole right of initiative in EU financial regulation and on Wednesday will propose forcing banks to tie up more capital to cover risky activities such as securitised products that turned toxic in the credit crunch.

Also in October the Commission will publish plans to oversee credit rating agencies, a sector criticised as too slow to warn investors about the risks in some securitised products.

EU Trade Commissioner Peter Mandelson said any further action should be thought out as it could have knock-on effects on the world's interlocked banking system.

"That's why we have to act in a very prudent way. I mean, the response of the European Commission I think is right," Mandelson told Reuters Television.

However, EU states and the European Parliament have the final say on the bank capital rules and rating agency initiatives, and some among them want more.

EU president France will present ideas for additional regulation at a meeting with its European G8 partners and European Central Bank President Jean-Claude Trichet this week.

"Only an integrated European supervisor, along the lines of the European System of Central Banks, which represents the interests of the euro zone, will be listened to," said Pervenche Beres, chairwoman of parliament's economic affairs committee.