LUXEMBOURG, Oct 6, 2008 (AFP) - EU countries launched a joint pledge Monday to protect individual savers and the ailing financial system, despite persisting divisions over whether a US-style bailout fund is needed.

'While no depositors in our countries' banks have lost any money, we will continue to take the necessary measures to protect both the system and individual depositors,' a joint declaration said.

'European leaders acknowledge the need for close coordination and cooperation,' according to the text which French President Nicolas Sarkozy read out in Paris.

However, fleshing out the details of a coordinated response to the crisis has proven difficult, with a number of countries rushing to upgrade bank deposit guarantees in order to avoid runs on an already fragile banking system.

After Germany offered a blanket guarantee on bank deposits on Sunday, Austria, Britain, Denmark, France, Portugal, Sweden indicated they had similar plans in the works.

Ireland triggered the rush last week with a law offering an unlimited guarantee on all deposits at its biggest banks.

The joint European pledge failed to stop a wave of panic that swept across global markets Monday amid deepening gloom at the scope of the banking crisis.

Despite the show of unity, European finance ministers were divided on whether Europe needed a US-style bailout fund to prop up the ailing financial system, as Italy sought to revive the idea.

'I don't think there is going to be anything near consensus about a European fund,' said Dutch Finance Minister Wouter Bos as he arrived for talks in Luxembourg with his eurozone counterparts.

'I hope there is going to be a consensus about a common approach on principles that should be applied whenever we want to intervene or whenever we want to help banks in problems,' he added.

The Netherlands was last week the first to raise the possibility of a plan mimicking the 700-billion-dollar rescue package approved by the US Congress last week.

However, the idea, which has the backing of the European Union's French presidency, was quickly torpedoed by Germany and Britain, which preferred solutions at the national level.

Germany, Europe's biggest economic power, in particular was eager to avoid getting stuck footing the bill for the bailout of other countries' banks.

'We are of the opinion that a European bailout plan would not be helpful,' said German deputy finance minister Joerg Asmussen.

Spanish Finance Minister Pedro Solbes also said that the idea of a European fund 'would be quite difficult' to implement in Europe 'given the structure of the European Union,' which does not have a big enough federal budget.

At weekend crisis talks in Paris, leaders of Britain, France, Germany and Italy vowed to to protect fragile banks but shunned the possibility of a European rescue fund.

Barely 24 hours later, Prime Minister Silvio Berlusconi said Italy would resurrect the idea of such a bailout fund at the meeting of eurozone finance ministers in Luxembourg on Monday and of all of their EU counterparts on Tuesday.

Berlusconi was quoted by the ANSA news agency as saying that minds had changed since the idea failed to gain traction at the Paris mini-summit.

On Saturday in Paris German Chancellor 'Angela Merkel couldn't accept' the proposal 'because she didn't have the power. Today, on the contrary, she said she agreed. France will do the same,' Berlusconi was quoted as saying Sunday.

The Netherlands floated the idea of national bailout funds last week amid swirling rumours of a European rescue mechanism but Germany quickly ruled out the possibility of an EU-wide approach.

However, since then the situation has taken a sharp turn for the worse in Germany as Berlin was forced on Sunday to hastily arrange a state-backed bailout of the country's fourth largest bank, Hypo Real Estate, by private institutions.