Government says not speculating on policy options

LONDON (Reuters) - The government said on Tuesday it would do whatever it takes to support the banking system and would not speculate on possible policy options.

"As the Chancellor (of the Exchequer Alistair Darling) said yesterday, we will do whatever it takes to maintain stability and support a well-functioning banking system," a Treasury spokesman said.

"We are not speculating on possible policy options," said a spokeswoman in Prime Minister Gordon Brown's office.

Shares in major British banks fell sharply on Tuesday on reports of funding talks between the government and banks, traders said.