The Welsh Development Agency is trying to raise �50m to help guarantee European Union funding for deprived areas of Wales.

Earnings in large parts of south and west Wales are so far behind the European average that the areas qualify for special Objective One grants - which could be worth �1bn.

But the amount of European aid received will depend on the sum raised in Wales.

The Welsh economy has struggled in recent months partly due to some overseas investors pulling out of the region. It is also suffering the long-term effects of the decline in traditional industries such as coal mining.

The WDA hopes to secure the �50m from banks and other high profile institutions by the end of the year.

The money will go to help small firms and community based enterprises.

The agency is working with other Objective One status areas - Cornwall, Merseyside and South Yorkshire.

A national survey in January found that the number of Welsh businesses going bust had risen by 26% in 1999 - the worst result in the UK.

However some reports suggest that the Welsh economy has shown signs of picking up in the first half of 2000.