Merkel and Berlusconi call for coherent action

BERLIN (Reuters) - Germany and Italy agree that Europe needs coherent action in the face of the financial crisis, German Chancellor Angela Merkel said on Monday.

Speaking at a joint news conference with Italian Prime Minister Silvio Berlusconi, Merkel said governments had to cooperate closely.

"We share the opinion that the Europeans must show coherent action because we belong to a common currency area," Merkel told the news conference in Berlin. "Each country must meet its responsibility in this respect," she said.

Berlusconi reiterated he wanted all European countries to set up a bank protection system. An "umbrella" or "common fund" would be the best solution for all 27 EU countries, he said.

He said he was certain Europe would find a common response to the crisis.

"But it's difficult to achieve and we're still not there, at this solution," he said.

The leaders of Europe's four largest economies pledged on Saturday to defend the stability of the banking system on a case-by-case basis, nationally or collectively, without recourse to the creation of a pan-European rescue fund.

On Monday, French President Nicolas Sarkozy, whose country holds the rotating EU presidency, issued a statement in which the 27 European Union countries committed to do what was needed to counter the mayhem and ensure no savers lost any money.

(Reporting by Iain Rogers, writing by Kerstin Gehmlich; editing by Carol Bishopric)