By John O'Donnell
BRUSSELS (Reuters) - European Union finance ministers made a fresh attempt on Tuesday to settle their differences over taxation of banks and trading as they prepared to approve the creation of new financial watchdogs.
Three years after the start of a banking and economic crisis, Europe is still grappling with the reform of its financial sector, and it remains unclear how it will govern its banks and financial markets.
On Tuesday, finance ministers from around the region are expected to wave through the creation of three new watchdogs to monitor banks, insurers and financial markets, a more far-reaching change than any being considered in Washington.
But they remain bogged down over how to impose levies on banks. Although many politicians want to tax banks more, they disagree chiefly over what should be done with the money.
European leaders are also divided over whether to start imposing a tax on financial transactions such as the buying and selling of shares.
These divisions, coupled with a reluctance internationally to follow suit, could scupper any agreement on such a tax.
On Tuesday, Austria's finance minister pledged support for both a bank levy and a tax on financial deals, but acknowledged there was disagreement on the matter.
"There are a lot of questions to be cleared up," Josef Proell said regarding the idea of a transaction tax. "It is important that as many countries -- if possible all -- in Europe take part."
Sweden, whose own attempt to tax financial deals backfired when trading moved abroad, warned at the meeting against repeating that mistake.
"We don't want to see a new transaction tax," Finance Minister Anders Borg told reporters. "The banking levy is more suitable as it would bring us revenue to deal with future crises."
