EU to revamp bank rules

By Mark John

BRUSSELS (Reuters) - European Union leaders will approve new rules to tighten bank supervision at a two-day summit which starts on Thursday and is intended to show the bloc has the economic crisis under control.

The leaders will support conservative Jose Manuel Barroso's bid for a second five-year term as president of the European Commission, providing some continuity in difficult times.

They are also due to agree legal guarantees to help persuade Irish voters to back the Lisbon treaty reforming decision making in the EU after its expansion to 27 member states.

The summit follows an election to the European Parliament in which there was a record-low turnout, attributed partly to disenchantment with the Union's patchy response to a crisis that has cost jobs and caused street protests across the region.

"European countries are still struggling with the impact of the financial and economic crisis," Czech Prime Minister Jan Fischer, whose country holds the EU presidency until the end of this month, wrote in an invitation letter to leaders.

"Much valuable work to mitigate the consequences of the crisis has already been carried out, but it is crucial to keep up efforts."

The EU has began stimulus measures which it says will cost up to four percent of its total output, and now wants to tighten a financial supervisory system that failed to shelter Europe from a crisis that stemmed from bad U.S. home loans.

The leaders agree on the need for tougher rules but London is concerned that the blueprint under discussion could encroach on its national regulator's power to steer the financial services sector which is crucial to Britain's economy.