Governments Struggle: Spreading Crisis

Investors from Tokyo to New York sold riskier assets in alarm at the prospect of further tightening of credit and bank lending and a potentially serious global economic recession. Despite concerted efforts to stem the crisis, investors were clearly seeking more concrete steps from authorities, perhaps in the form of coordinated action from next weekend's meeting of the Group of Seven industrial nations.

SPREADING CRISIS

There were signs that the crisis was biting deeper across the world.

-- South Korea said it would dip into the world's sixth-largest foreign exchange reserves to help with loans.

-- Stock markets crumbled and credit conditions tightened in the Gulf, a boom area for investors over the past few years as a result of an influx of oil money.

-- Bankers in Pakistan called for urgent central bank action to stop the liquidity crunch putting banks in jeopardy as overnight call rates closed between 25 and 28 percent.

(Additional reporting from Milan, Paris, Frankfurt, Brussels, Luxembourg, New York, Washington, Sydney, Seoul, Beijing, Stockholm, Hanoi, Dubai, Karachi)

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