Geithner calls for action on euro debt crisis

Geithner, on a visit to London, also urged Europeans to work for a globally consistent approach to financial reform as the European Union said it might go it alone with a crisis levy on banks.

After talks with his British counterpart, George Osborne, Geithner said of the EU plan to support indebted states: "It's a good programme (and) has got all the right elements. What markets want to see is action."

The fund would provide heavily conditioned loans to euro zone governments that had difficulty borrowing on capital markets after a separate bailout for Greece failed to calm fears of a sovereign debt default in southern European countries.

European shares rallied by 3 % from Tuesday's nine-month lows and Wall Street was more than 1 % up but the euro remained under pressure amid continuing signs of banks' reluctance to lend to euro zone counterparts exposed to south European sovereign debt.

Geithner's stress on coordination of new regulation appeared aimed chiefly at Germany, Europe's biggest economy, which stunned markets and angered EU partners by unilaterally banning some speculative financial trades last week.

He is due to meet German Finance Minister Wolfgang Schaeuble in Berlin on Thursday after dinner in Frankfurt with European Central Bank President Jean-Claude Trichet.

On his flight to Europe from China, Geithner told reporters he would "emphasise the importance of a carefully designed global approach" to the next stage of financial reform.

Business television channel CNBC said he would also urge the Europeans to stress test their banks to identify those that need new capital and restore market confidence in the banking system.

The executive European Commission outlined a framework on Wednesday for a levy on banks' assets, liabilities or profits to pay in advance for the cost of future crises, setting the stage for a showdown on the tax at G20 summit in Toronto next month.

"On this question, we can go forward by ourselves, on our own," Barnier told Reuters. "It is not up to the United States to pay for the financial stability of Europe."

The Commission said the proceeds of a bank levy should be ring-fenced for national bank resolution funds, putting Brussels at odds with France and Britain, which want the money to help strapped national budgets.

Fears that Europe's debt crisis could engulf some banks have made them reluctant to lend to each other as happened during the 2007-2009 financial crisis.

The costs for banks to borrow dollars from each other crept up to a new 10-month high on Wednesday.