The governments of Belgium and Luxembourg are scrambling to find a solution for the troubled financial group Fortis after the European Commission approved the nationalisation of its Netherlands-based operations by Dutch authorities.

German Chancellor Angela Merkel's says her government is "pulling out all the stops" to salvage a 35-billion-euro plan for troubled bank Hypo Real Estate, and in a move to build confidence, Germany has guaranteed private saving deposits.

European Union monitors in Georgia witnessed the dismantling of a Russian checkpoint near the South Ossetia border in the "first open sign" of a pullback ahead of the Oct. 10 deadline agreed upon under a French-brokered peace plan.

Leaders from Europe's main economic powers called for a looser application of EU deficit and state aid rules in the face of the credit crunch, during a mini summit on the crisis hosted by French President Nicolas Sarkozy in Paris.

Turkey vowed the battle against separatist Kurdish rebels would be pursued "above all other concerns" after 15 soldiers and 23 militants died in clashes sparked by a rebel attack near the Iraqi border.

A bomb exploded outside a court in the town of Tolosa in Spain's northeastern Basque region, following a warning call from the armed Basque separatist group ETA. The blast was limited, and no injuries were reported.

The European Commission unveiled plans to extend minimum maternity leave in Europe from 14 to 18 weeks, a move which would force several EU nations to offer more support to new mothers.

EU Trade Commissioner and former WTO negotiator Peter Mandelson has stepped down and returned to join the cabinet of former nemesis, PM Gordon Brown. He is to be replaced by Baroness Catherine Ashton.

Russia has issued a sharp warning to Ukraine over reports it delivered weapons to Georgia during the August war. On a visit to Moscow to discuss gas prices, Ukraine's Premier Yulia Tymoshenko denied the accusations.

The euro hit its lowest point against the US currency since September 18, 2007, falling to 1.3856 dollars in early trading on Thursday after US Senate approved the $700 billion bailout plan.

Conservative party leader David Cameron said in a surprise speech at his party's annual conference that he was ready to set aside party differences to help Prime Minister Gordon Brown ensure market stability during the financial crisis.

German Chancellor Angela Merkel meets Russian President Dmitri Medvedev on Thursday in St.Petersburg. Medvedev is expected to push for stronger ties with Germany and is also expected to discuss the "North Stream" gas pipeline project.

Europe's four biggest economies - Britain, France, Germany and Italy - will meet Saturday with euro-zone chief Jean-Claude Juncker in Paris to agree on a European response to the global financial crisis, the French presidency said.

EU observers have moved into a Russian-controlled buffer zone around Georgia's breakaway region of South Ossetia. More than 200 observers will oversee the Russian troop pull-out from these zones next to South Ossetia and Abkhazia.

Most European Union states support ending the bloc's military mission in Bosnia and replacing it with a civilian mission, French Defence Minister Hervé Morin said on Wednesday. No date, however, has been fixed for the move.

Russia's Supreme Court has ruled that its last tsar, Nicolas II, was unlawfully killed by Soviet authorities. The decision negates the Bolshevik claims used to instigate the 1917 revolution.

In Spain's biggest ever operation against child pornography, police arrested 121 suspects in nationwide raids. 96 others were accused of possession and distribution of Internet child pornography.

After a day of mixed trading, European stocks rebounded amid hopes that US lawmakers would eventually pass a billion-dollar rescue package to shore up financial markets.

The UN General Assembly will consider a Serbian draft resolution calling for a ruling by the International Court of Justice on the legality of Kosovo's independence - recognized by 46 countries, but not Serbia or Russia.