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EU finance chiefs in crisis talks EU finance chiefs in crisis talks
(10 minutes later)
European Union finance ministers are to meet in Luxembourg for emergency talks on the world's financial meltdown.European Union finance ministers are to meet in Luxembourg for emergency talks on the world's financial meltdown.
The ministers from all 27 member states hope to bolster money markets after a day of panic saw huge share index losses in Germany, France and the UK.The ministers from all 27 member states hope to bolster money markets after a day of panic saw huge share index losses in Germany, France and the UK.
A $700bn (£398bn) US bank bail-out and moves by several EU states to help their banks have not quelled fears.A $700bn (£398bn) US bank bail-out and moves by several EU states to help their banks have not quelled fears.
Asian markets were volatile on Tuesday as investors worried global government action may not resolve the crisis.Asian markets were volatile on Tuesday as investors worried global government action may not resolve the crisis.
Japan's Nikkei index plunged more than 5% - shattering the psychological 10,000-point barrier for the first time in nearly five years - before bouncing back.Japan's Nikkei index plunged more than 5% - shattering the psychological 10,000-point barrier for the first time in nearly five years - before bouncing back.
Australia's financial market suffered before the country's central bank cut its official interest rate by 1%, prompting a rally. It was the largest cut for 16 years by the Reserve Bank of Australia.Australia's financial market suffered before the country's central bank cut its official interest rate by 1%, prompting a rally. It was the largest cut for 16 years by the Reserve Bank of Australia.
Share prices in China, Taiwan and South Korea also saw a turbulent morning's trading.Share prices in China, Taiwan and South Korea also saw a turbulent morning's trading.
The main US index earlier fell 8% before regaining some of its losses. President George W Bush said it would take some time for the rescue plan to restore confidence to the financial system. Earlier on Wall Street, the Dow Jones index fell 8% before regaining some of its losses. President George W Bush said it would take some time for the rescue plan to restore confidence to the financial system.
'Apocalyptic tone''Apocalyptic tone'
EU leaders earlier issued a joint statement saying they will take the necessary measures to protect both Europe's banking system and individual depositors.EU leaders earlier issued a joint statement saying they will take the necessary measures to protect both Europe's banking system and individual depositors.
In Luxembourg, the EU finance ministers aim to frame guidelines for guaranteeing public savings, correspondents say.In Luxembourg, the EU finance ministers aim to frame guidelines for guaranteeing public savings, correspondents say.
There's a mess in Europe too, because European banks were also seduced over the preceding few years into lending too much too cheaply to consumers and businesses Robert PestonBBC business editor Read Robert's blogInteractive map: How European governments have reactedBloomberg: Bail-out not enoughThere's a mess in Europe too, because European banks were also seduced over the preceding few years into lending too much too cheaply to consumers and businesses Robert PestonBBC business editor Read Robert's blogInteractive map: How European governments have reactedBloomberg: Bail-out not enough
Since late last week, Ireland, Germany, Greece, Austria and Denmark have declared separately that money held by ailing banks will be safe.Since late last week, Ireland, Germany, Greece, Austria and Denmark have declared separately that money held by ailing banks will be safe.
Analysts say the move has angered fellow EU member states who fear it could prompt savers to transfer their money into guaranteed institutions.Analysts say the move has angered fellow EU member states who fear it could prompt savers to transfer their money into guaranteed institutions.
Luxembourg's Prime Minister Jean-Claude Juncker said no major financial institution would be allowed to fail.Luxembourg's Prime Minister Jean-Claude Juncker said no major financial institution would be allowed to fail.
Jean-Claude Trichet, president of the European Central Bank, added: "We will continue to provide monetary markets with all the liquidity they need for as long as it is necessary."Jean-Claude Trichet, president of the European Central Bank, added: "We will continue to provide monetary markets with all the liquidity they need for as long as it is necessary."
But Europe's fragmented response to the crisis so far has done little to reassure investors, correspondents say.But Europe's fragmented response to the crisis so far has done little to reassure investors, correspondents say.
The strains threatening the continent's economies have been felt most acutely in Iceland, where PM Gier Haarde made a national address warning his country it faced national bankruptcy.The strains threatening the continent's economies have been felt most acutely in Iceland, where PM Gier Haarde made a national address warning his country it faced national bankruptcy.
The BBC's Ray Furlong in Reykjavik said the tone was, at times, apocalyptic.The BBC's Ray Furlong in Reykjavik said the tone was, at times, apocalyptic.
In a late-night session, parliament passed emergency legislation to shore up the country's banking system after the national currency, the krona, fell 30% against the euro on Monday.In a late-night session, parliament passed emergency legislation to shore up the country's banking system after the national currency, the krona, fell 30% against the euro on Monday.
IMF warningIMF warning
Across Europe, central banks have already offered more than $74bn in short-term loans to banks in an attempt to make cash available.Across Europe, central banks have already offered more than $74bn in short-term loans to banks in an attempt to make cash available.
Investors have not been bowled over by government interventionInvestors have not been bowled over by government intervention
But while the idea of a European fund to rescue troubled banks has been floated, it has attracted too little support to go any further, says the BBC's economics correspondent Andrew Walker in Washington.But while the idea of a European fund to rescue troubled banks has been floated, it has attracted too little support to go any further, says the BBC's economics correspondent Andrew Walker in Washington.
He also says the financial crisis will come under the microscope at the International Monetary Fund meetings in Washington in the next week.He also says the financial crisis will come under the microscope at the International Monetary Fund meetings in Washington in the next week.
Its analysts will say the global economy has been sandbagged by high commodity prices, the housing slump and the growing financial crisis.Its analysts will say the global economy has been sandbagged by high commodity prices, the housing slump and the growing financial crisis.
IMF economists have already warned of an increased risk of a severe and protracted economic downturn.IMF economists have already warned of an increased risk of a severe and protracted economic downturn.
On Tuesday a banking reform bill is due to go before the UK parliament while German lawmakers are scheduled to hold an emergency session.On Tuesday a banking reform bill is due to go before the UK parliament while German lawmakers are scheduled to hold an emergency session.
Congress hearingsCongress hearings
In the US, both Mr Bush and Ben Bernanke, the chairman of the US Federal Reserve, are scheduled to speak later about the crisis.In the US, both Mr Bush and Ben Bernanke, the chairman of the US Federal Reserve, are scheduled to speak later about the crisis.
Meanwhile, Congress began hearings into the cause of the financial meltdown that triggered the rescue plan.Meanwhile, Congress began hearings into the cause of the financial meltdown that triggered the rescue plan.
Richard Fuld, the head of collapsed US investment bank Lehman Brothers, said federal regulators knew his firm had, like others, been caught up in a financial tsunami emanating from the mortgage markets.Richard Fuld, the head of collapsed US investment bank Lehman Brothers, said federal regulators knew his firm had, like others, been caught up in a financial tsunami emanating from the mortgage markets.
The day after Lehman filed for bankruptcy, the government bailed out the insurance giant AIG, saying it was too big to fail. AIG executives are also testifying.The day after Lehman filed for bankruptcy, the government bailed out the insurance giant AIG, saying it was too big to fail. AIG executives are also testifying.
The FBI is looking at Lehman, AIG and US mortgage giants Fannie Mae and Freddie Mac as part of a probe into possible corporate fraud.The FBI is looking at Lehman, AIG and US mortgage giants Fannie Mae and Freddie Mac as part of a probe into possible corporate fraud.
Meanwhile US utility companies reported a record rise in the number of customers defaulting on their gas and electricity bills.Meanwhile US utility companies reported a record rise in the number of customers defaulting on their gas and electricity bills.
The largest increase in power cut-offs were in the states of Michigan (22%) and New York (17%), although rises were also reported in Pennsylvania, Florida and California.The largest increase in power cut-offs were in the states of Michigan (22%) and New York (17%), although rises were also reported in Pennsylvania, Florida and California.