EU clEU clash over the best way to tax the banksash over the best way to tax the banks

This warning and a series of disagreements wrecked efforts by European finance ministers to find common ground at a meeting that left them as far apart as ever on central issues of financial reform.

The gathering saw Paris and London clash when French Economy Minister Christine Lagarde blocked new EU hedge fund rules, and a rare intervention by the European Central Bank's president, who poured scorn on Berlin-backed plans for a financial transaction tax.

"Many ministers have said that this bank levy is in reality a tax and this must remain a matter of national sovereignty," said Italian Economy Minister Giulio Tremonti, firing a warning shot at Brussels' attempts to write rules for EU bank levies.

An official said these concerns were echoed in the meeting by British financial services chief Mark Hoban, who also said such levies were a matter of national sovereignty – diplomatic code telling the EU to back off.

Though most European countries agree they would like to tax banks more, after the crisis that many accuse them of causing, they disagree over how this should be done and what should be done with the money raised.