Brussels - European Union leaders Wednesday endorsed a major financial rescue package but remained deadlocked over plans to fight climate change, with Italy joining Poland in threatening to veto ambitious greenhouse gas cuts at a time of economic crisis.

The EU summit took place during yet another black day for the world's stock exchanges, with indexes plummeting amid renewed fears of a global recession.

British Prime Minister Gordon Brown stole much of the limelight in Brussels by proposing new rules for global capitalism.

"Global financial markets present challenges that no one nation can solve in isolation," Brown told fellow EU heads of state and government.

Europe's efforts to come to grips with the credit crunch were flanked by a joint call from Group of Eight (G8) leaders to meet to address the financial crisis and revive world trade talks.

"While our focus now is on the immediate task of stabilizing markets and restoring confidence, changes to the regulatory and institutional regimes for the world's financial sectors are needed to remedy deficiencies exposed by the current crisis," the leaders of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States said in a joint statement.

With the EU facing an institutional stalemate due to Ireland's rejection of the reforming Lisbon Treaty, there were growing calls for a new mandate to be given to the current head of the European Commission, Jose Manuel Barroso.

"Barroso stands for continuity and the cohesion of Europe, and this is what the EU needs in the coming years," Peter Hintze, a state secretary in the German finance ministry, told Deutsche Presse- Agentur dpa as he revealed that the EU's centre-right heads of state and government had agreed to renew their confidence in the former Portuguese premier.

Much of the discussions in Brussels focussed on a 2-trillion-euro (2.7-trillion-dollar) European financial rescue plan inspired by a similar initiative put together by Brown and approved Sunday in Paris by the 15 countries that share the euro plus Britain.

Coming on the back of a similar initiative by the United States, the European plan includes measures to guarantee interbank lending and to partly nationalize shaky financial institutions by providing them with liquidity in exchange for shares.

It envisages greater safeguards for citizens' bank deposits.

"Faced with an unprecedented crisis, the EU 27 have given a massive, united response to the principles approved by the euro group," said French President Nicolas Sarkozy in his capacity as current president of the EU.

EU leaders had to overcome some resistance from the Czech Republic, which complained that it would cost too much and allowed too much state intervention into the free market.

"The Czech government seems to consider that the forces of the free market could arrange and reorient the turmoil we are going through in the right direction. I do not think so," said Luxembourg Prime Minister Jean-Claude Juncker, who also chairs euro group meetings.

The other major issue on the leaders' agenda was climate change.

This saw Italy throw its weight behind Poland and seven other member states from Central and Eastern Europe in threatening to veto EU proposals to cut the bloc's greenhouse gas emissions to 20 per cent below 1990 levels by 2020.

"Yes, we have to limit CO2 (carbon dioxide) emissions, but this must be done with a global agreement, because it's not conceivable that the EU should be the only one to do it when the other major producers of CO2 don't," said Italian Prime Minister Silvio Berlusconi, echoing similar complaints by US President George W Bush.

Sarkozy shot back: "We can't question our (climate) goals, they have to stand, and the timetable has to stand. We have to find a position before January. If we scale back our targets, if we change the deadlines, we'll count for nothing. If some people want Europe to count for nothing, let them say so."

Despite the rancour, there were some humourous moments in Brussels.

Berlusconi once again raised eyebrows by suggesting that Russia should join the European Union, while Poland's premier and president, bitter rivals back home, ignored each other during the meeting.

President Lech Kaczynski had previously been forced to charter his own plane to Brussels after being left behind by Prime Minister Donald Tusk. (dpa)