Oct. 8 (Bloomberg) -- Austria will offer unlimited guarantees on bank deposits and prohibit short selling as the government seeks to bolster confidence in the Alpine country, Chancellor Alfred Gusenbauer said today after a cabinet meeting.

``Austria's banks are secure and the deposits are secure,'' Gusenbauer said today at a press briefing in Vienna. Austria should follow German Chancellor Angela Merkel's Oct. 5 guarantee that all deposits be covered, said Gusenbauer, 48, who is preparing to leave office.

Austria's move to guarantee all deposits breaks a European Union agreement made yesterday. Finance ministers from the 15 nations using the euro agreed yesterday at a meeting to guarantee consumers' bank deposits up to 50,000 euros.

``We welcome this initiative to give additional security to savings and strengthen trust in the health of national banks,'' Raiffeisen Zentralbank Oesterreich AG Chief Executive Walter Rothensteiner said in an e-mail.

Austria's parliament will convene Oct. 28 to vote on laws restricting investors ability to speculate on falling Austrian equity values, Finance Minister Wilhelm Molterer said today.

The Austrian Traded Index, comprising the country's 20 most actively traded stocks, is down 22 percent this week and has fallen 50 percent this year. Austria's Erste Bank AG and Raiffeisen Bank International AG have led declines, dropping 34 percent and 29 percent respectively since Oct. 6.

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net.

Last Updated: October 8, 2008 07:11 EDT