Britain said it hoped to contribute to a trust fund for the region and added its support to calls for a moratorium on debt payments by all affected countries.

President Arnoldo Aleman yesterday announced France's forgiveness of Nicaragua's debt, calling it ``a message of optimism which surely will stimulate other countries to take the same decision.''

French Finance Minister Dominique Strauss-Kahn, speaking in Paris, confirmed the decision and added that the cancellation applied also to Honduras.

Nicaragua and Honduras had appealed for help with their foreign debts during a summit that Central American presidents held on Monday to discuss responses to Hurricane Mitch, which they say killed some 10,000people.

Nicaragua's total foreign debt totals $6 billion, $70 million of which it owes to France. Honduras owes a total of $4.2 billion, including $30 million to France.