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“One thing is for certain, we’re in challenging times,” the president said after meeting with Treasury Secretary Henry Paulson and other senior economic advisers. “But another thing is for certain: We’ve taken strong, decisive action.”

The president commended the Fed for its urgent actions over the weekend. “We’ve shown the country and the world that the United States is on top of the situation,” he said.

Bush spoke on a day of turmoil and plunging prices on global financial markets. Oil prices hit a record in Asian trading, U.S. stock index futures fell sharply and the dollar hit record lows.

The White House moved quickly to raise Bush’s public profile Monday, and he continued to send an upbeat message, even in acknowledging a downturn that keeps roiling the economy and the people as well.

“We agree upon the fact that our financial institutions are strong, and that our capital markets are functioning efficiently and effectively,” Bush said with his economic aides.

Still, Bush said his administration is monitoring economic developments closely.

“When need be, we’ll act decisively in a way that continues to bring order to financial markets,” Bush said.

He did not indicate any other steps his government might take, or when.

“In the long run, our economy is going to be fine,” Bush said. “Right now we’re dealing with a difficult situation.”

The Federal Reserve, in an extraordinarily rare weekend move, became a lender of last resort for Wall Street investment houses to begin securing short-term emergency loans. The central bank also approved a cut in its emergency lending rate to financial institutions to 3.25% from 3.50%.

“The financial crisis which started in the United States is more serious and more global than it was a few weeks ago,” IMF Chief Dominique Strauss-Kahn said in Paris.

“The risks and dangers are very high. The economic environment is still worsening.”

More industry consolidation and acquisitions may follow after JPMorgan Chase & Co on Sunday said it was buying Bear Stearns for $236 million, or deep discount of $2 a share, a fraction of the $30 price on Friday and record share price of about $172 last year.

“Last evening the Bear Stearns situation reached a crescendo, as JPMorgan agreed to acquire the wounded broker for a token amount of $2 per share,” CreditSights said. “The reality check is that there are many challenged major banks, brokers, thrifts, finance/mortgage companies, and only a handful of bonafide strong U.S. banks.

Rising prices and alleged corruption have sparked recent clashes at bakeries in poorer neighbourhoods, leading to several deaths.

Hosni Mubarak said eradicating bread queues was “imperative”.

The army and interior ministry control numerous bakeries normally used to supply bread for troops and police.

Mr Mubarak issued his order to the army at a meeting of cabinet ministers on Sunday that was called to address the growing crisis, his spokesman said.

“Bread should be provided to the citizens and the lines should disappear,” Suleiman Awwad quoted Mr Mubarak as saying.

The price of wheat has more than tripled on international markets since last summer.

Mr Mubarak has ordered the government to use some foreign reserves to buy additional wheat from the international market, the spokesman said.

Many of Egypt’s 70m population, about half of whom live below the poverty line, survive on subsidised bread.

Gary Pugh, director of forensic sciences at Scotland Yard and the new DNA spokesman for the Association of Chief Police Officers (Acpo), said a debate was needed on how far Britain should go in identifying potential offenders, given that some experts believe it is possible to identify future offending traits in children as young as five.

‘If we have a primary means of identifying people before they offend, then in the long-term the benefits of targeting younger people are extremely large,’ said Pugh. ‘You could argue the younger the better. Criminologists say some people will grow out of crime; others won’t. We have to find who are possibly going to be the biggest threat to society.’

Pugh admitted that the deeply controversial suggestion raised issues of parental consent, potential stigmatisation and the role of teachers in identifying future offenders, but said society needed an open, mature discussion on how best to tackle crime before it took place. There are currently 4.5 million genetic samples on the UK database – the largest in Europe – but police believe more are required to reduce crime further. ‘The number of unsolved crimes says we are not sampling enough of the right people,’ Pugh told The Observer. However, he said the notion of universal sampling – everyone being forced to give their genetic samples to the database – is currently prohibited by cost and logistics.

“The speed of the slide in the dollar/yen is so rapid that U.S. action alone can no longer stop the dollar’s downward trend,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investment.

“The time is ripe for coordinated intervention by U.S., European and Japanese authorities.”

Remarks on Monday by Japanese Finance Minister Fukushiro Nukaga also kept investors on their toes.

“We will cooperate with European and U.S. currency authorities and will monitor markets very carefully,” Nukaga told reporters, adding that the latest moves in currency markets had been excessively volatile and that he would watch markets carefully.

Nukaga’s comments gave a slight lift to the dollar, which last traded near 97 yen after earlier dropping by over 3 percent to a 13-year low of 95.77 yen on electronic trading platform EBS.

“His comments were different from usual so that led to some speculation about joint intervention,” said Hiroshi Yoshida, a forex manager at Shinkin Central Bank.

Crude for April delivery was up 95 cents at $111.16 a barrel by 10:35 p.m. EDT, after hitting $111.42 earlier. May London Brent crude was 55 cents higher at $106.75 a barrel.

In an unprecedented Sunday night announcement that underscores the depth of the market fears, the Fed said it has authorized a new lending tool to help its network of primary dealers — including firms that interact with the Fed daily but don’t fall under its direct supervision — to provide financing in securitization markets. Growing worries about securities backed by mortgages has been exacerbating the credit-market upheaval and threatening the overall economy.

The initiatives are “designed to bolster market liquidity and promote orderly market functioning.” the Fed said in a statement. “Liquid, well-functioning markets are essential for the promotion of economic growth.”

The Fed governors in Washington also approved a request by the Federal Reserve Bank of New York to lower the rate at which it lends directly to banks by a quarter percentage point to 3.25%. That narrows the gap between the discount rate and the federal funds rate, for overnight lending between banks, to a quarter point. It also extended the length of those direct loans to 90 days from 30 days.

The deal calls for J.P. Morgan to pay $2 a share in a stock-swap transaction, with J.P. Morgan Chase exchanging 0.05473 share of its common stock for each Bear Stearns share. Both companies’ boards have approved the transaction, which values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At Friday’s close, Bear Stearns’s stock-market value was about $3.54 billion. It finished at $30 a share in 4 p.m. New York Stock Exchange composite trading Friday.

Effective immediately, J.P. Morgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. The deal isn’t subject to any conditions, except shareholder approval. It is expected to close before the end of the second quarter.

Government regulators, including the Federal Reserve and the Office of the Comptroller of the Currency, have given their blessing to the transaction

Many well-known investors, from billionaire Joe Lewis to Bruce Sherman, the head of Legg Mason Inc.’s Private Capital Management Inc. money-management firm, have seen the value of their stakes in Bear Stearns plummet. The pain could be most acute for Bear Stearns’s employees, who are steeped in a culture of personal ownership — and hold about a third of the firm’s shares outstanding.

Through the weekend, Bear Stearns bankers were summoned to the company’s headquarters on New York’s Madison Avenue, where they were told to prepare lists of ongoing deals and business relationships. Representatives from prospective buyers circulated through conference rooms, with J.P. Morgan executives asking questions of Bear Stearns’s senior management. A separate bidding group, including J.C. Flowers & Co. and Kohlberg Kravis Roberts & Co., also was in the mix, said a person familiar with the discussions.

Bear Stearns shares, which traded as high as $170 in January 2007, fell 47% on Friday after the firm was forced to seek emergency funding from the Federal Reserve and J.P. Morgan to stay afloat amid a severe cash crunch.

One stumbling point for a sale appeared to be the amount of risk that J.P. Morgan would absorb in any type of transaction. While J.P. Morgan was eager to snap up some of Bear Stearns assets — such as its prime brokerage business that caters to hedge funds — Chief Executive Officer James Dimon was reluctant to pursue the deal without certain assurances that would protect his firm’s exposure, said people familiar with the matter. Spokesmen for Mr. Dimon couldn’t be reached yesterday.

Despite the emergency funding from J.P. Morgan and the Federal Reserve that was announced Friday and gives Bear access to cash for an initial period of 28 days, the clock is ticking on the 85-year-old firm. Late Friday, credit-ratings firms downgraded Bear Stearns to two or three levels above junk status. The downgrades also had a big impact on Bear Stearns’s viability, as they severely crimped the firm’s number of potential trading partners.

Regulators, bankers and investors are concerned Bear Stearns’s stock could plummet even further when the stock market opens today. A continued exodus by parties with which the investment bank trades could even cause it to collapse. Still, unwinding Bear Stearns could be a nightmare because of the plethora of Wall Street firms with which it has dealings.

Analysts and investors are bracing for more bad news as securities firms report earnings this week, though Bear Stearns’s results are expected to surpass the average estimate from analysts surveyed by Thomson Financial, say people familiar with the matter. A Bear spokesman declined to comment.

The price represents a startling 93 percent discount to Bear Stearns’ closing stock price on Friday on the New York Stock Exchange.

Bankers and policy makers raced to complete the deal before financial markets in Asia opened on Monday, as fears grew that the financial panic could spread if Bear Stearns failed to find a buyer.

The deal, done at the behest of the Federal Reserve and the Treasury Department, punctuates the stunning downfall of one of Wall Street’s biggest and most storied firms. Bear Stearns weathered the vagaries of the markets for 85 years, surviving the Depression and a dozen recessions only to meet its end in the rapidly unfolding credit crisis now afflicting the American economy.

Traders in all three centres were panicking even for those banks not directly exposed to Bear. They feared that the problems experienced at the stricken bank signalled that the credit crisis has deteriorated to a new level.

Yesterday, traders began to look anxiously at the robustness of Lehman Brothers, which, although bigger than Bear, is small compared with JPMorgan Chase, Morgan Stanley and Citigroup.

Shares in Lehman dropped 11 per cent yesterday, a far bigger fall than its other rivals, which saw their stock decline by about 3 per cent.

Although Lehman is more diversified than Bear, it has a similar investment profile, with huge holdings in mortgage-backed debt. Lehman sought to reassure the market when it said yesterday that it had secured a $2 billion (£1 billion) credit line with Paolo Tonucci, the bank’s global treasurer, calling it “a strong signal from the market and our key bank relationships”.

However, Chris Whalen, of the Wall Street consultancy Institutional Risk Analytics, said: “This is going to go all the way up the chain. There is a risk that all broker dealers are going to become an endangered species if the credit crisis is not sorted out. If they can’t fund themselves, they will have to shrink. All the other firms are in danger, too.”

The violence erupted just two weeks before China’s Summer Olympic celebrations kick off with the start of the torch relay, which passes through Tibet. China is gambling that its crackdown will not draw an international outcry over human rights violations that could lead to boycotts of the Olympics.

The latest unrest began Monday on the anniversary of a 1959 uprising against Chinese rule. Tibet was effectively independent for decades before communist troops entered in 1950.

Initially, the protests were led by Buddhist monks demanding the release of other detained monks. Their demands spiraled to include cries for Tibet’s independence and turned violent Friday when police tried to stop a group of protesting monks. Pent-up grievances against Chinese rule came to the fore, as Tibetans directed their anger against Chinese and their shops, hotels and other businesses.

It was the fiercest challenge to Beijing’s authority in nearly two decades.

China’s official Xinhua News Agency reported at least 10 civilians were burned to death on Friday. The Dalai Lama’s exiled Tibetan government in India said Chinese authorities killed at least 30 Tibetans and possibly as many as 100. The figures could not be independently verified.

In the Tibetan capital Lhasa on Saturday, police manned checkpoints and armored personnel carriers rattled on mostly empty streets as people stayed indoors under a curfew, witnesses said. The show of force imposed a tense quiet.

Several witnesses reported hearing occasional bursts of gunfire. One Westerner who went to a rooftop in Lhasa’s old city said he saw troops with automatic rifles moving through the streets firing, though did not see anyone shot.

Foreign tourists in Lhasa were told to leave, a hotel manager and travel guide said, with the guide adding that some were turned back at the airport.

“There are military blockades blocking off whole portions of the city, and the entire city is basically closed down,” said a 23-year-old Canadian student who arrived in Lhasa on Saturday and who was making plans to leave. “All the restaurants are closed, all the hotels are closed.”

Even as Chinese forces appeared to reassert control in Lhasa, a second day of sympathy protests erupted in an important Tibetan town 750 miles away.

Police fired tear gas to disperse hundreds of Buddhist monks and other Tibetans after they marched from the historic Labrang monastery and smashed windows in the county police headquarters in Xiahe, witnesses said.

Also Saturday, fresh demonstrations by Tibetan exiles and their supporters sprouted up in New York, neighboring Nepal, Switzerland and Australia.

The Chinese government is hoping a successful Olympics will boost its popularity at home as well as its image abroad. But Beijing’s hosting of the Olympics has already attracted scrutiny of China’s human rights record and its pollution problems.

So far, international criticism of the crackdown in Tibet has been mild. The U.S. and European Union called for Chinese restraint without any threats of an Olympic boycott or other sanctions.