EU finance ministers are to meet today in Luxembourg following a day of confusion and record falls on European stock markets.

The FTSE 100 fell a record 391.1 points last night as a day of uncertainty drew to a close with the news Iceland had become the latest government to issue a guarantee for all savers.

Chancellor Alistair Darling attempted to calm the markets yesterday by saying he would “do whatever is necessary to maintain stability” – but with no firm promises, stocks plunged.

Earlier, Germany appeared to offer a unilateral guarantee for their savers, prompting Austria and Denmark to follow suit. Ireland and Greece have already made similar promises.

The moves are seen as protectionist in some quarters as it may encourage the flow of cash to countries that have made a guarantee from those who have not, worsening the liquidity crisis.

The Treasury is keen to co-ordinate a response with other EU members rather than countries taking individual action.

Addressing parliament last night, Mr Darling said: “I’ve always been clear that each country needs to do whatever is needed to deal with its own particular circumstances.

“However, I also believe that wherever it is possible to do so, countries should work and act together to maintain stability.

“In light of what has happened over the weekend it’s especially important that EU member states work far more closely together. So tomorrow I will meet European finance ministers in Luxembourg, to further discuss how we bring stability to the system and protect depositors.”