In the wake of the carnage in last week’s markets, European countries pledged to inject capital into ailing banks and guarantee lending between banks – a step that analysts said was critical to easing a crisis of confidence and shaking loose the credit markets.

Europe’s action throws the spotlight back to the United States, where officials said Treasury Secretary Henry Paulson was studying the feasibility of backing up loans between banks here. Lending between banks is considered vital to the smooth operation of the financial system and the broader economy, but it has slowed considerably because banks are concerned about being repaid should the other bank run into financial trouble.

The Treasury Department was not expected to announce anything before today, officials said. But the government was helping an American financial icon, Morgan Stanley, trying to salvage a $9 billion investment by a Japanese bank, Mitsubishi UFJ Financial.

The initial reaction of investors was positive, with stocks up in several Asian markets and U.S. stock futures – which are bets on the direction of the market prior to its opening – higher as well. The early signs, following one of the worst weeks ever for stock markets, are not a definitive sign of a reversal in sentiment, but were seen as a potentially hopeful sign that the markets may at least stop their free fall.

“It’s going to take actions more than words at this time, given the extreme distress that the money markets are in and the extreme distress that the equity markets were in,” said Douglas Peta, a market strategist at J&W Seligman & Co.

He predicted further drops in the stock and bond markets; the Dow Jones industrial average fell 18 percent last week.

In Paris, European leaders agreed to a unified plan that would inject billions of euros into their banks and guarantee bank borrowing for periods up to five years. President Nicolas Sarkozy of France said governments would announce concrete rescue plans, tailored to their national circumstances, simultaneously today.

“We need concrete measures, we need unity,” Sarkozy declared. “That’s what we achieved today.”

U.S. SWITCHES GEARS

Leaders of the 15 countries that use the euro did not put a price tag on any of their promises – contrary to Britain, where last week Prime Minister Gordon Brown announced $255 billion in government funds and other measures to stabilize its banks, or the United States, where a $700 billion bailout plan will now be used partly to infuse banks with fresh capital.

The United States is overhauling its rescue package, which had originally focused on buying distressed assets from banks. In a policy turnabout, Paulson said Friday that the government would now take equity stakes in banks.

The government’s role in the Morgan Stanley negotiations may be an early test of the Treasury’s retooled strategy.

The government has so far been reluctant to guarantee loans to other banks out of concern that it could give banks a competitive advantage over other financial institutions, and thus have unintended consequences.

Europe may have acted quicker, in large part because banks there are facing urgent problems, said Tobias Levkovich, chief equity strategist at Citigroup. Many European financial firms have borrowed more extensively relative to their capital than most American banks.

“The Europeans were sitting with a much closer foot to the fire than we were,” he said. “I don’t think they could sit around and wait a week or two.”

‘WE ARE COMMITTED’

For Europeans, the agreement represented a sharp reversal from two weeks ago, when Germany and other countries played down the need for a concerted response to what some characterized as an American problem.

“We are committed in all European states to recapitalize banks if we establish a threat to solvency and a risk to the economy,” the Belgian finance minister, Didier Reynders, said after the leaders met. “The goal is to kick-start the interbank lending market.”

Reynders said the European Central Bank had also committed to helping to restore trading in the commercial paper market, where companies conduct short-term borrowing. The United States also has agreed to guarantee commercial paper loans in an effort to unfreeze that market.

Officials said action would be taken at the national level, within the framework of a “toolbox.” The idea, they said, is that governments face different challenges and need to act quickly in the face of a crisis and that a common front will avoid the danger that one country may undercut another.

But Reynders dismissed the possibility of a common European fund for the banks. Germany had opposed such an idea because it feared it would end up bailing out banks in other countries.

“Our goal is to have coordinated action for the euro zone,” said Angela Merkel, the German chancellor, and the meeting “is a very important signal for the strength of the euro zone.”

Officials said France and Germany intended to announce national plans today worth hundreds of billions of euros.