EU-wide bank bailout fund has key backing

ROME (Reuters) - A common fund to bail out Europe's banks will be proposed this week by Italy and is already assured the backing of Germany and France, Italian Prime Minister Silvio Berlusconi was quoted by Italian agencies as saying on Sunday.

Berlusconi said his Economy Minister Giulio Tremonti will propose the setting up of the fund, to be worth 3 percent of countries' GDP, to his fellow finance ministers at meetings in Luxembourg on Monday and Tuesday.

A crisis meeting in Paris of the leaders of Britain, France, Germany and Italy on Saturday issued a series of recommendations which did not include a common bank bail-out fund.

"Yesterday in Paris I proposed that we do like what the US did," Berlusconi was quoted by ANSA as telling a centre-right gathering in Milan.

"Tremonti will propose to Ecofin the setting up of a common fund worth 3 percent of GDP ... yesterday (German Chancellor Angela) Merkel couldn't accept because she didn't have the powers, today she has said she agrees. Tomorrow France will do the same."