PARIS Oct 17 (Reuters) - European governments will ask banks to have a 9 percent capital ratio by 2013 at the latest as part of a comprehensive package to tackle the euro zone’s debt crisis, though talks are underway to accelerate the calendar, French officials said on Monday.Government spokeswoman Valerie Pecresse, who is also budget minister, said French banks would be recapitalised even though they were fundamentally solid as part of a European strategy to restore confidence in the markets.”We are going towards a collective European solution,” Pecresse said told RMC radio. “We will ask all European banks to have 9 percent capital ratios by 2013 to be more solid to face risk.”We want French banks to rely on private capital and that means less bonuses, no dividends, and they can also ask private investors. The state is only a last resort.”French officials say that Europe is studying accelerating the timetable toward meeting the stricter capital ratios under the Basel III accord, as part of a strategy to stem the euro zone crisis to be agreed by European leaders next weekend.”The European initiative will define a calendar with a level of capital which will be between Basel II and Basel III: we will be at Basel 2.5 on the level of capital demanded,” said one senior French official.”Will it be the same 9 percent level in a shorter calendar? That is one of the subjects under discussion.”Bank of France Governor Christian Noyer said in an interview late on Sunday he believed the accelerated deadline for meeting higher capital levels in the progress toward meeting Basel III criteria would be summer 2012.”We need to go faster in raising capital levels. The exact rules for Europe are still being finalised … French banks should be able to make it because we are talking about a period of about 9 months from here to next summer,” Noyer told TV5 Monde.”We will ask from next year very significant steps in that direction so banks respond to the concerns in the market” about capitalisation levels, he said.French banks should be able to meet the new levels by retaining earnings or by restricting dividends, Noyer said.EU leaders are expected to unveil plans at a summit in Brussels on Sunday to make Greece’s debt sustainable via higher ‘haircuts’ for private bondholders, increasing the firepower of the EFSF rescue fund and recapitalising the region’s banks.Market speculation over the solidity of France’s banks pummeled their share prices over the summer, prompting BNP Paribas and SocGen to announce a slew of asset sales to strengthen their balance sheets.

* Traders rush to hedge against stock declines; VIX surges* Citigroup, Wells Fargo down after banks report results* Indexes off: Dow 1.9 pct, S&P 1.8 pct, Nasdaq 1.9 pctBy Angela MoonNEW YORK, Oct 17 (Reuters) - U.S. stocks fell on Monday as traders rushed to buy protection against a further decline in the market after comments from Germany’s finance minister heightened concerns about the euro zone’s debt crisis.German Finance Minister Wolfgang Schaeuble said European Union governments would adopt a five-point plan at the Brussels meeting on Oct. 23, but “we won’t have a definitive solution this weekend,” he added.Optimism the euro zone was making progress in resolving its sovereign debt crisis had pushed the S&P 500 to the top of a two-month trading range.The index had risen for two straight weeks for the first time since July and recorded its best two-week performance since 2009. The gains had also put the Dow industrials and the Nasdaq back into positive territory for the year.”We were bound to see some sort of a retracement after indexes shot up so much in so little time. Now that we realize again that there will be bumps along the road (to recovery in the debt crisis), it’s giving investors a reason to sell,” said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.”The mood is still bearish and will be for a while.”The CBOE Volatility index VIX , Wall Street’s so-called fear gauge, rose 16 percent to 32.82, its highest one-day jump since August.The cautious comment from Schaeuble also sent the euro lower against the dollar and weighed on financial stocks. The KBW bank index lost 3.3 percent.Compounding pressure on the sector were disappointing earnings from Wells Fargo & Co , which fell 7 percent to $24.80 and was the biggest weight on the S&P 500.The Dow Jones industrial average was down 237.84 points, or 2.04 percent, at 11,406.65. The Standard & Poor’s 500 Index was down 23.66 points, or 1.93 percent, at 1,200.92. The Nasdaq Composite Index was down 56.47 points, or 2.12 percent, at 2,611.38.Events in Europe overshadowed a $21 billion deal by Kinder Morgan Inc to buy rival El Paso Corp , combining the two largest natural gas pipeline operators in North America in a huge bet on the fast-growing market for that fuel.El Paso’s shares surged 24.9 percent to $24.46 and Kinder Morgan shares jumped 6.1 percent to $28.54.In its quarterly results, Wells Fargo missed Wall Street’s earnings estimates by 1 cent a share as interest income fell below expectations.Shares of Citigroup Inc edged down 0.8 percent to $28.17. The bank reported higher third-quarter earnings as it set aside less money to cover bad loans and recorded an accounting gain available to banks in turbulent markets.Of the 45 companies in the S&P 500 that have reported earnings, 62 percent have beaten analyst expectations, according to Thomson Reuters data.