BBC news 2008-10-07 加文本

BBC News with Ian Perdon

Share prices around the world have plunged as investors despaired about the prospects of rapid action by governments to address the credit crisis. London closed down almost 8 percent, and Frankfurt and Paris saw similar collapses. Markets as far apart as Russia, Brazil and India all took hits. The main index in New York, the Dow Jones, fell by 8 percent at one point, before closing, down 3 percent. Andrew Walker reports from Washington.

While shares dived, President Bush tried to give reassurance. The economy is going to be just fine in the long run, he said. But stock market investors are very nervous about the economic outlook for the coming months. Most of them thought the Bush administration's rescue package necessary to address the problems in the banking system. But now the legislation is in place, they realize there will be a delay before the purchase of problem financial assets will begin. The administration is moving ahead with the task, however, a former Goldman Sachs investment banker has been appointed to the Treasury to oversee it. The idea of the asset purchases is to improve conditions in the credit market where banks have become very nervous of lending. For now, at least interest rates in those markets remain high which means the hopeful easing has not really begun.

European governments have been trying to reassure investors that the financial system is stable. The French President Nicolas Sarkozy issued a statement on behalf of all 27 European Union countries.(Www.hxen.net)

Heads of State and Government stated that each of us will take all measures necessary to ensure the stability of the financial system, being through injecting liquidity from the central banks, through measures targeted at specific banks, or by enhanced debits to protect deposits. Not one person with/ deposits in our country's banks has suffered any losses. And we should continue to take the measures required to protect the system as well as save us.

But the statement also suggested the crisis would be handled differently by each country. And correspondents say Europe's fragmented response to the crisis so far has done little to reassure investors.

In Iceland where the banks have been coming under the severest pressure of all, the Prime Minister Geir Haarde has warned that the country is facing national bankruptcy. He said his government was prepared to take control of all Iceland’s banks if necessary.

In a situation like this, it's every man for himself, every country for itself, everybody is taking care of their best interests, that's what we are doing. We're making sure that we have a functioning bank system. We're taking the interests of the population as a whole, ahead of the interests of the banks and their shareholders, providing the economy with a functioning payments and liquidity system.

The Icelandic Parliament is in an emergency session debating new legislation to give the government sweeping powers over the financial sector. It follows the suspension of the Icelandic stock exchange.

World News from the BBC.

The United Nations is evacuating its remaining foreign aid workers from the Somali town of Baladweyn as the security situation worsens. In the capital Mogadishu, at least 11 people died when government forces and Islamist insurgents exchanged mortar fire. Mark Doyle has this report.

Well-placed humanitarian sources who asked not to be named, told the BBC that the UN had begun evacuating its expatriate personnel from the town of Baladweyn because of fears that the heavy fighting in the capital Mogadishu could spread to other cities. The Islamist and nationalist militias fighting the Ethiopian-backed Somali government know that the United Nations by its very nature, tends to deal day by day, with the government side rather than the insurgents. So fears have been expressed in aid circles that the increasingly bold insurgents could see the UN workers as associated with the government.

The US Democratic presidential candidate Barack Obama has attacked his Republican opponent John McCain over links with a 1980s financial scandal. A new internet video being emailed to Obama’s supporters criticizes Mr. McCain for his connections with the entrepreneur Charles Keating who was convicted of fraud.

China has cancelled military contacts with the United States in protest against Washington's decision to sell a major package of advanced weapons to Taiwan. A spokesman for the US Defense Department said China had cancelled visits by military officials, protocols and other contacts.

A controversial novel about the Prophet Muhammad's child bride has been published in the United States, days after the office of the books British publisher was attacked. Beaufort Books said it was publishing 'The Jewel of Medina' ahead of schedule so it could be assessed on its merits as literature rather than the potential offense it could cause to Muslims. The novel’s original publisher Random House dropped the book earlier this year.

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