Oct. 9 (Bloomberg) -- Italy pledged funds to prevent the collapse of any struggling bank, the third European country this week to guarantee deposits.

Finance Minister Giulio Tremonti told lawmakers in parliament today the government will step in only if needed and that the country's banks remain solid. He declined to say how much money will be made available as part of a plan announced last night that could give the government preference shares in Italian lenders.

UniCredit SpA, Italy's biggest bank by assets, rallied from three days of declines that left shares at an 11-year low. UniCredit added 9.2 percent to 2.67 euros. Intesa Sanpaolo SpA, the second-biggest bank, pared gains and declined 7.6 percent after U.S. stocks fell. Assicurazioni Generali SpA slipped 2.7 percent.

``Italy's banks are on average stronger and better capitalized than those in the rest of Europe,'' said Fabrizio Capanna, head of retail credit trading at BNP Paribas SA in London. ``But the fact that the government stepped in quickly is a good thing.''

While the U.K. is buying stakes in its banks, and Spain emulated the U.S. strategy of buying assets from struggling lenders, Italy and France have offered verbal assurances that they won't let institutions fail. Italy also reiterated a pledge to insure bank deposits of as much as 103,000 euros ($140,000).

Savings Protected

``Banking interventions will be on a case-by-case basis,'' Tremonti said today. Yesterday, Prime Minister Silvio Berlusconi said Italians won't lose ``even a single euro'' of their savings.

``No Italian bank will fail,'' Berlusconi said.

Italian banks and companies are solid and their share prices will bounce back, Berlusconi said today. After having guaranteed the banking system, Berlusconi said he spoke with other EU leaders about boosting growth.

``After this financial crisis we must try to sustain the real economy,'' Berlusconi said. ``That can be done by having the courage to cut taxes.''

While newspaper Il Sole-24 Ore said on its Web site yesterday that the government decree created a fund of 20 billion euros ($27 billion) for possible bailouts, Tremonti today remained vague.

``We will do what it takes,'' he told lawmakers. ``That's why we didn't give any numbers for the amount of possible interventions.''

British Prime Minister Gordon Brown's government yesterday announced it will invest as much as 50 billion-pounds ($87 billion) in struggling banks, and the Bank of England will make at least 200 billion pounds available in loans. Spain on Oct. 7 put aside as much as 50 billion euros to buy bank assets, the first move by a European nation to copy the U.S. approach.

Collateral Rules

As part of the plan to restore confidence in the banking system, Bank of Italy Governor Mario Draghi, sitting next to Berlusconi, said yesterday he will ease rules on collateral that lenders are required to deposit when seeking financing from the central bank.

UniCredit, Intesa Sanpaolo and insurer Generali account for more than 35 percent of the benchmark SP/MIB index. Their plunge in value has pushed down the SP/MIB 43 percent this year, the biggest decline of Europe's five largest exchanges and more than the 31 percent decline in the Dow Jones Industrial Average.

The slump in Italian stocks is feeding the pessimism among consumers and manufacturers that has led the Italian economy to lag behind its European partners. Italy contracted 0.3 percent in the second quarter and may have already slipped into recession. The ISAE Institute today cut its growth forecast for Italy, saying the economy will stagnate this year.

Tremonti said any eventual aid to the banks wouldn't jeopardize Italy's commitment to keeping its budget deficit below the European Union limit of 3 percent of gross domestic product.

To contact the reporters on this story: Anthony DiPaola at adipaola@bloomberg.net; Steve Scherer in Rome at scherer@bloomberg.net

Last Updated: October 9, 2008 12:22 EDT