Europe bails out banks, UK wants new Bretton Woods

LONDON (Reuters) - Governments across the world launched multi-billion dollar bailouts on Monday to shore up tottering global banks and Britain called for a new Bretton Woods agreement to reshape the world financial system.

Stocks markets reacted positively to rescue packages from Britain, Germany, France, Italy and other European governments, Wall Street joining Europe and Asia to open up over 4 percent.

The slew of bank bailouts worth hundreds of billions of dollars were designed to stave off the world's worst financial crisis in nearly 80 years, accompanied by declining global economic growth and the threat of widespread recession.

"Only by global action can we fully restore the confidence that is needed and build the international financial order," said British Prime Minister Gordon Brown.

He called on world leaders to create a new "financial architecture" to reflect the global reach of economics and banking, in much the same way that the current international economic system was set up at a conference in Bretton Woods, New Hampshire, in 1944.

In the United States, focus was on Morgan Stanley, whose share price plunged 58 percent in the last week, after Japan's Mitsubishi UFJ Financial Group said on Monday it had invested $9 billion under revised terms.

The deal provided much-needed investment and dashed fears at least temporarily that Morgan Stanley would collapse.

Britain said it would spend up to 37 billion pounds ($63.95 billion) buying into top UK banks, making the UK government the biggest shareholder in Royal Bank of Scotland and the merged Lloyds TSB/HBOS.