European Union officials are working on plans to boost bank capital to contain the euro-region's debt crisis, the International Monetary Fund said, as Moody's Investors Service warned of deteriorating public finances.

“There is no secret at all that European authorities and the European Commission are all working together on a plan to bring more official capital, more public-sector capital, into the banking sector,” Antonio Borges, the IMF's European department head, said today in Brussels. “We would recommend that it move to a European approach,” he said. “More should be done on a cross-border basis.”

European bank stocks climbed, with France's Credit Agricole SA and Dexia leading the 46-member Bloomberg Europe Banks and Financial Services Index 2.6 percent higher. Credit Agricole climbed 9.4 percent to 5.14 euros of 12:50 p.m. in Paris trading, while Dexia was up 7.2 percent to 1.08 euros.