Asian and European leaders closed ranks today to try to bolster the confidence of shell-shocked investors fearful that the year-long global credit crunch is mutating into a worldwide recession.
Poor economic data around the world and another international barrage of corporate profit warnings and job cuts triggered a brutal sell-off in stocks from Tokyo to New York.
"The danger of a collapse (on financial markets) is far from over. Any all-clear would be wrong," German finance minister Peer Steinbrueck said in an interview released today.
"We are still in a dangerous situation. I am not going to mislead anyone and say: we have got everything under control," he told Bild am Sonntagnewspaper.
The worries of political leaders were mirrored in the markets.
Seventy-nine years to the day after the 1929 crash that ushered in the Great Depression, currencies experienced extreme volatility, while oil and other commodities tumbled on fears of plummeting demand that would accompany a slowdown.
Many analysts declared that Europe was in recession after private-sector activity in the euro zone's economy contracted at the fastest pace in at least a decade and Britain's economy shrank 0.5 per cent in the third quarter, much more than expected.
"The euro area has entered a deep recessionary spiral," said Aurelio Maccario, chief euro zone economist at Italian bank UniCredit.
The financial crisis, set off by a U.S. housing market collapse nearly 15 months ago, claimed another victim.
PNC Financial Services Group Inc agreed to purchase ailing Ohio-based National City Corp in a government-supported $5.6 billion deal that will create the fifth biggest US bank by deposits.
National City has been crippled by its soured mortgage loans.
PNC was one of four regional banks that said they would receive cash infusions under a $250 billion bank recapitalisation programme that is part of the US Treasury's wider $700 billion US financial services rescue package.
The financial crisis has injected urgency into the Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries, a biennial talking shop usually shorn of substance.
Meeting in Beijing, leaders queued up to pledge cooperation to tackle the turmoil by taking "firm, decisive and effective measures in a responsible and timely manner".
"Through such concerted efforts, leaders expressed full confidence that the crisis could be overcome," a statement added.
Reuters