Oct. 6 (Bloomberg) -- European Union leaders pledged to protect depositors from losing their savings and to support the financial system, seeking to bolster confidence as shares tumbled across the region today.

EU countries ``will take whatever measures are necessary to maintain the stability of the financial system,'' according to a joint statement by the 27 EU member countries that was released today by Italian Prime Minister Silvio Berlusconi's office. ``We will continue to take the necessary measures to protect the system so that individual depositors in our countries' banks do not suffer any loss of money.''

Today's statement came just two days after a meeting among the leaders of Europe's four biggest economies failed to deliver a common position to shore up the financial system amid the deepening credit crunch. Germany yesterday announced a bailout for its second-biggest real-estate lender, and BNP Paribas SA agreed to buy Fortis's units in Belgium and Luxembourg. Governments in Germany, Sweden and Denmark have guaranteed deposits, following similar moves in France, Italy and Ireland.

The leaders issued their statement ``in response to the general view that people need to be reassured that their deposits are safe, otherwise we might see a run on the banks and a repeat of 1929,'' said Robert Leonardi, senior lecturer on EU politics at the London School of Economics. The declaration was ``necessary'' because ``each individual country doesn't count for much,'' he said.

Stocks Plunge

Europe's stock exchanges plunged, with all the main indexes closing down more than 7 percent, while the Bloomberg 500 Europe Banks and Financial Services Index dropped 9 percent. The euro also suffered its biggest one-day drop against the yen since its 1999 debut, and fell to a 14-month low against the dollar.

``The European Union needs a coherent approach, working in close agreement,'' Merkel said in Berlin today before talks with Berlusconi. ``Each member country must tackle its own problems and we can't risk creating new dangers to the banking system.''

The Italian leader said he prefers a joint approach. ``I made the suggestion that it would be better if we created an umbrella solution to the crisis,'' Berlusconi said.``I know this would be difficult but would mean that we all together go forward in approaching the crisis.''

Finance ministers from the 15 countries that use the euro are meeting today in Luxembourg, and the rest of the EU finance ministers will join them tomorrow.

`Coordinated Action'

EU Monetary Affairs Commissioner Joaquin Almunia called for governments to take ``coordinated action'' and to ``avoid unilateral decisions'' as he entered the Luxembourg meeting. That action probably won't mirror the $700 billion bailout fund set up in the U.S., Dutch Finance Minister Wouter Bos said.

``I don't think there's going to be anything near consensus about a European fund,'' he said. ``I hope there is going to be consensus about a common approach on principles that should be applied whenever we want to intervene or want to help banks in problems.''

Almunia said he knew nothing about Italy's proposal, announced by Berlusconi last night, to constitute an EU bailout fund with each country contributing 3 percent of gross domestic product.

``It's especially important that EU member states work far more closely together,'' U.K. Chancellor of the Exchequer Alistair Darling told lawmakers. ``So tomorrow I will meet European finance ministers in Luxembourg, to further discuss how we bring stability to the system and protect depositors.''

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

Last Updated: October 6, 2008 15:04 EDT