Bank of England's Tucker to testify on rate rigging row LONDON (Reuters) - A row about how much top British politicians and officials knew about interest rate rigging will intensify on Monday as the man tipped to be the next Bank of England governor reveals what he told Barclays when it fiddled its figures. Paul Tucker, deputy governor of the Bank of England, will appear before lawmakers examining Barclays and other banks suspected of manipulating Libor, the interbank lending rate that underpins trillions of dollars of contracts around the globe. He appears at 11:30 a.m. Earlier this month, Barclays was fined a record $450 million by U.S. and UK regulators for conspiring to rig Libor rates between 2005 and 2009, plunging the bank into crisis and triggering a brawl between politicians over who was to blame. Brussels also stepped up its involvement in the probe and said it intends to propose new rules that would criminalize the manipulation of indexes such as Libor. "We need to draw lessons from the Libor case," said a spokesman for Michel Barnier, the EU Commissioner in charge of financial regulation. We intend to close the regulatory gap in our proposed market abuse legislation by including the direct manipulation of market indexes such as Libor. The BoE's Tucker asked to appear before the lawmakers' panel to clarify his position after questions over his role in the scandal. Barclays is among more than a dozen global banks under investigation by authorities in North America, Europe and Japan, but the only one so far to admit wrongdoing. Barclays says some of its traders tried to manipulate Libor to improve their trading positions, and also says it wrongly lowered its estimates of the interest it paid other banks at the height of the financial crisis in 2008, to make its health appear better in comparison. An internal email released by Barclays last week drew Tucker into the scandal, showing that in October 2008 Tucker told Bob Diamond, then Barclays investment bank boss and later its CEO, that top officials questioned why Barclays rates were so high. "Mr. Tucker stated the levels of calls he was receiving from Whitehall were 'senior' and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently," Diamond wrote in 2008. Barclays has said Diamond's deputy, Jerry del Missier, understood Tucker's comments as a green light to fiddle rates. Diamond deflected blame from Tucker last week, telling the Treasury Select Committee he did not take Tucker's warning as an instruction to lower Libor estimates, and that del Missier had misunderstood it. Diamond and del Missier quit Barclays on Tuesday. Several sources have said the BoE and financial regulator had made clear they wanted Diamond to go. The Bank of England declined to comment on Diamond's note. Before it was released, a bank spokesman said: "It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of Libor." Tucker has not commented himself. Britain's Finance Minister George Osborne has said people close to then-Prime Minister Gordon Brown were implicated. Osborne's Conservatives-led coalition replaced Brown's Labour government in 2010. Labour has angrily denied Osborne's accusation of complicity, leading to heated exchanges on the floor of the House of Commons. Tucker's appearance before the Treasury Select Committee will be followed the next day by Marcus Agius, who quit as Barclays chairman on Monday to take the heat off Diamond, but then became executive chairman when Diamond left. Agius will stay until a replacement is found. Adair Turner, chairman of the Financial Services Authority, could also be called to appear later in the week. The scandal - complete with emails showing bankers boasting of fiddling figures and congratulating each other with offers of champagne - has sparked fierce criticism about the financial industry in general and Barclays in particular. Politicians say Diamond fostered an aggressive culture of excessive risk-taking, and have raised the threat of more political and regulatory intrusion in its operations. New pressure could force the bank to shrink or hive off its investment banking arm. Diamond says Barclays was unfairly targeted for agreeing to accept blame for a practice that was widespread in the industry. Barclays is the only bank to settle in what has been a long-running Libor investigation involving more than a dozen banks, including UBS, Deutsche Bank and Royal Bank of Scotland. Britain's fraud squad took up the case on Friday, raising the prospect of criminal prosecutions, and sources told Reuters that Germany's markets regulator had launched a probe into Deutsche Bank. Two Deutsche Bank employees were suspended and left the bank in late 2011 after an examination of whether staff were involved in manipulating interbank lending rates, two sources at Deutsche Bank said, declining to reveal their identity. Deutsche Bank declined to comment, referring to its last quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates between 2005 and 2011. UBS declined to comment beyond its last quarterly filing, which said it was being investigated over whether there were improper attempts to manipulate Libor, and it had been granted conditional leniency or immunity for co-operating. RBS has said "certain members" of the bank are alleged to have individually or collectively manipulated Libor. It declined further comment. Libor, or the London interbank offered rate, is compiled from estimates by large international banks of how much they believe they have to pay to borrow from each other. It is used for $550 trillion of interest rate derivatives contracts and influences rates on mortgages, student loans and credit cards. Additional reporting by John O'Donnell in Brussels, Philipp Halstrick and Arno Schuetze in Frankfurt and Emma Thomassen in Zurich; Editing by Philippa Fletcher