French-German Disputes Could Mar European Summit BRUSSELS - European Union leaders sought Thursday to overcome sharp differences over how to improve supervision of their banks and budgets, at the start of a two-day summit meeting aimed at resolving the euro zone crisis. But with market pressure on their single currency easing, at least for now, there were already signs that leaders could return to a familiar pattern of bickering, which could delay already agreed-to changes, like creating a single regulator for all euro zone banks. One of the issues overhanging the meeting is a dispute between France and Germany on whether to create such a supervisor by January, as the European Commission has proposed. Paris is pushing to meet that deadline. French leaders have also pressed for speedy adoption of European legislation to tighten budget discipline across the euro zone, as well as measures to pool at least some of the euro zone countries" debt. Germany, by contrast, has emphasized a more cautious approach and is seeking even greater powers of intervention to enable the most solvent countries to enforce budgetary discipline in the euro zone. The French-German dispute matters. Agreement between governments in Paris and Berlin is seen as vital to any steps toward further integration in Europe and for ensuring the survival of the common currency for the 17 E.U. countries that use it. Ahead of the Brussels meeting, Chancellor Angela Merkel of Germany signaled the need for caution and a much grander vision for how to secure the longevity of the euro. "We are of the opinion - and I speak for the whole German government on this - that we could go a step further by giving Europe real rights of intervention in national budgets," Ms. Merkel told lawmakers in Berlin on Thursday. That earned a tart riposte from President François Hollande of France, who said that budget intervention "is not on the agenda," as he arrived at the meeting. "The only decision that will be taken is to set up a banking union by the end of the year and especially the banking supervision," Mr. Hollande said. The creation of a single banking regulator for the euro area was supposed to be a relatively straightforward matter after leaders agreed at a summit meeting in late June to put all lenders in the region under the aegis of the European Central Bank. The idea was eagerly supported by Ireland, Italy and Spain, because it would be a precursor to letting weak banks in those countries tap Europe's new bailout fund directly, without loading more debt on those countries" governments. Since June, though, Germany has balked at proposals by the European Commission and France to put all 6,000 lenders in euro zone countries under the supervision of the regulator in a system that would be phased in starting Jan. 1. The government in Berlin wants to ensure that the E.C.B. first has the proper capacity to do that job, while a number German regional leaders are opposed to greater scrutiny of state and local banks by the central bank. Moreover, last month finance ministers from Germany, Finland and the Netherlands set off new alarms with a joint statement proposing that any bank rescues from the bailout fund go only toward future problems - not to help clean up current messes. Non-euro Eastern and Central European countries have their own concerns about a potential run on their banks, which would not be part of the new central system or backstopped by the European bailout fund. And then there is Britain, which is an E.U. member but has its own currency. The British are seeking to secure a voting system that would ensure that decisions cannot be imposed on Britain's banks by the euro zone countries working together as a bloc. And although Britain does not intend to submit its banks to the new supervision system, its prime minister, David Cameron, was expected to press at the meeting for the system to cover a large number of banks and to include plans for a resolution system for shutting down banks and a common deposit-guarantee system. Some diplomats said Germany could signal support for allowing the centralized bank-oversight system to get underway as soon as next year - perhaps in exchange for pledges by other euro area countries for robust supervision of a euro-zone-only budget. But they said an overall deal was unlikely. "There might be some progress," said an E.U. diplomat who spoke on condition of anonymity because the talks were going on behind closed doors. "But you can say something positive without achieving any progress at all," the diplomat warned. Another French-German dispute focuses on the possible creation of a budget strictly for euro zone countries. France has strongly argued in favor of using that pool of money to fight sudden shocks to individual euro area economies. Such a weapon would differ in important ways from the new European Stability Mechanism, the bailout fund that held its first board meeting this month, by providing direct aid. But Germany has emphasized the need for another form of fiscal surveillance, or "contracts," in exchange any such budget for the euro zone. Germany also wants any such budget to encourage structural changes rather than be used simply to fight fires. For all the expected debate, though, warnings are growing louder of a creeping lack of urgency to tackle the most pressing problems still hanging over the euro zone. A pledge in September by the European Central Bank to buy unlimited quantities of bonds has steadied borrowing costs in some of the most vulnerable euro zone countries like Spain. That decision has taken the edge off the crisis but could set the scene for a new outbreak of market jitters. "It is very important that the summit now maintains the momentum of reforming the economic and monetary union including the banking union," Olli Rehn, the European commissioner for economic and monetary affairs, said Thursday. Now the political will of member states is tested. In the case of Greece, little is expected from the summit meeting beyond a statement designed to paper over the slow pace of the negotiations with Athens, and to lend support for Prime Minister Antonis Samaras. "The language will welcome action that Saramas has taken, and it will encourage him, but it won't put pressure Greece or take the pressure off of Greece," said one diplomat, who spoke on condition of anonymity ahead of the formal meetings in Brussels.