Middle East slide

Amid the financial turmoil, markets in the Middle East continued to spiral downward on Sunday, the first day of the business week for most countries in the region.

The Qatar Index fell 7.18 per cent by the close. In Saudi Arabia they have continued to fall after Saturday's four-year low - this time by 2.59 per cent.

In Dubai, stocks were also down by 5.41 per cent, and in Egypt, they have dropped by 5.39 per cent.

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The IMF said it backed a plan by the G7 most industrialised nations to try to stabilise markets and urged "exceptional vigilance, co-ordination and readiness to take bold action" to contain a firestorm that pushed global stocks to five-year lows on Friday.

Christine Lagarde, France's economy minister, said the Sunday gathering would go beyond talking about remedies to "put meat, muscles on the bones of that skeleton and to develop, follow up and execute upon it".

G7 plan

The US appealed for patience but the IMF said time was short after the G7 nations - which include the US, Britain, France, Germany, Italy, Japan and Canada - failed to agree on concrete measures to end the crisis at a meeting on Friday.

George Bush, the US president, met with G7 economic chiefs and officials from the IMF and World Bank and said top industrial nations would work together to solve the crisis.

"I'm confident that the world's major economies can overcome the challenges we face," Bush said, adding that Washington was working as fast as possible to implement a $700bn financial bailout package approved a week ago.

"The benefits will not be realised overnight, but as these actions take effect, they will help restore stability to our markets and confidence to our financial institutions."

Bush acknowledged the market disruption originated in US mortgage markets but warned everyone must help to resolve it.

"It doesn't matter if you're a rich country or a poor country, a developed country or a developing country - we're all in this together. We must work collaboratively," he said.

Bank rescue

The Sunday Times newspaper in London meanwhile said Britain would launch its biggest retail bank rescue on Monday when the four largest banks - HBOS, Royal Bank of Scotland, Lloyds TSB and Barclays - ask for a combined $60.5bn lifeline.

The unprecedented move would make the government the biggest shareholder in at least two banks, HBOS and Royal Bank of Scotland, the newspaper said on its website. It did not give a named source for its information.   

No government officials or representatives from the four banks were immediately available to comment on the report.

Australia also announced that it would guarantee all bank deposits for three years and guarantee wholesale funding to Australian banks in an attempt to combat the credit crisis.

Australia would also make $2.6bn available for mortgage-backed securities to help maintain liquidity for non-bank lenders, Kevin Rudd, the prime minister, told reporters.