Pressure is expected to build for lower interest rates in the US and internationally, in the wake of the latest collapse of US share prices.

Last night the US treasury secretary, Mr Robert Rubin, said that the world economy was in a "difficult period" but added he was confident that the US economy was fundamentally in good shape with the outlook for strong growth and low inflation.

He said he had been in touch with other G7 countries and also with the Federal Reserve Board chairman, Mr Alan Greenspan, on the issue. If the US market continued to fall, then pressure will build on Greenspan to reduce rates. Last night US officials confirmed that Mr Rubin had been in touch with the US president, Mr Clinton, aboard Air Force One, as he headed towards Russia The market turmoil will also increase pressure on the G7 and Europe to assist Russia. EU Commission officials are lobbying for a more active response to the crisis. Meanwhile Mr Tony Blair, as chairman of the G7, is coming under pressure to call an emergency meeting so as to plot a concrete response to the crisis. G7 finance ministers are scheduled to meet at the end of this month.

Meanwhile the largest US public pension fund said it was sticking to its investment strategy despite the steep sell-off in worldwide equity markets, a spokesman said.

We're going to buy and hold and ride through this like we normally do with any kind of decline," Mr Brad Pacheco, a spokesman for the California Public Employees' Retirement System (Calpers), said in a telephone interview.

"The only selling we would do is rebalancing the index funds internally. Other than that I would imagine there are some buying opportunities for us," he said, adding that he expected the Calpers portfolio had lost some of its value Monday but he declined to offer a specific estimate.