Brown targets Islamic finance

He will pledge Treasury backing for an effort to promote financial services targeted at Muslims in Britain. And he will promise to aim for greater trade with the Middle East as part of a drive to promote economic development in Muslim countries.

The Chancellor will use a speech to an Islamic trade and finance conference to try to repair the damage critics claim has been done by the police raid and shooting in east London. Muslim leaders have accused Tony Blair of 'oppressing' British Muslims by allowing the security services to target them in the fight against terrorism.

The Chancellor will adopt a distinctly conciliatory note by promising to do more to make it easier for devout Muslims to access financial services. Islam frowns on the payment of interest - considered usury in religious terms - making it difficult for many Muslims to access mortgages and bank accounts.

Mr Brown's three- step scheme begins with a pledge to make London the global centre for Islamic banking. He will cite work the Government has already done in tax and regulatory reform to support the development of financial regulations which comply with strict Sharia law.

Mr Brown will also point to the way some banks have used Government reforms to pioneer Islamic banking products.