Income from employment fell for the eleventh month running - August saw the steepest decline in take-home pay for nine months - while spending power continued to be squeezed by rising prices. Markit said these factors contributed to the sharpest reduction in savings since March 2009. Debt levels increased for the fifth consecutive month, and at the fastest pace since November 2010.

The gloomy outlook applied to all income groups, age ranges and regions monitored by the survey, but consumers in the north of England are suffering more than those in the south, the financial information company found. Tim Moore, senior economist at Markit, said: "With consumer spending accounting for around two-thirds of UK gross domestic product, this does not bode well for the second half of the year. It is likely that the UK economy will be increasingly dependent on external demand."

Although respondents were slightly less pessimistic than in the previous survey about the outlook for their finances in 12 months' time, 49% said they expected their financial position to worsen while just 27% anticipated an improvement. Markit said the pressure on purchasing power is unlikely to ease in the short term, with the Bank of England expecting inflation to reach 5% later this year as higher prices continue to filter through to household budgets. Fears over the eurozone crisis and the prospect of a double-dip recession are also hitting consumer confidence, Mr Moore added.

The remarks by Bashar Assad, who spoke during an interview with state-run television, came just days after the United States and its European allies called for him to step down, and hours after a diplomat said Assad's regime was "scrubbing blood off the streets" ahead of a UN visit. "I am not worried about the security situation right now, we can say the security situation is better," Assad said in his fourth public appearance since the revolt against his family's 40-year rule erupted in mid-March.

"It may seem dangerous, but in fact we are able to deal with it," Assad said. In a now-familiar refrain, Assad promised imminent reforms - including parliamentary elections by February - but insisted the unrest was being driven by a foreign conspiracy, not true reform seekers. Assad said President Barack Obama's calls for him to give up power had "no value." The opposition rejected Assad's remarks, saying they have lost confidence in his promises of reform while his forces open fire on peaceful protesters.

Assad warned against Libya-style military intervention, saying "any military action against Syria will bring repercussions that (the West) cannot tolerate." There have been no serious international plans to launch such an operation, in part because the opposition has said it does not want Western countries to interfere.

The rebels reportedly captured Colonel Gaddafi's son Saif al-Islam, as the colonel himself vowed to fight on. International Criminal Court (ICC) prosecutor Luis Moreno-Ocampo said he had been informed of the arrest. The court has indicted Saif al-Islam for torturing and killing civilians. Another of Colonel Gaddafi's sons, Muhammad, was speaking on the phone to al-Jazeera TV when he said the rebels were surrounding his home. Gunfire was heard before the line cut off. Government forces still control parts of the city, including the areas around Colonel Gaddafi's Bab al-Azizia compound and near the hotel where foreign journalists are staying, south of the city centre.

Matthew Price, BBC News, Tripoli reports:- "The hotel where we and other foreign journalists are staying is still under the control of pro-Gaddafi guards, and we believe that they are now preparing to defend it from opposition forces. There's been an awful lot of firing going on in recent hours in the area."

"We believe there will some sort of rebel attempt to take the hotel because it's the place from which the Libyan information minister has been broadcasting his take on the conflict - it's also the place from where Libyan TV has recently been broadcasting its nightly shows. So it's one of the targets of the opposition forces. What's happening here is in sharp contrast to what's happening three miles - or 5km - down the road in Green Square, where there are jubilant scenes."

The new Masonic lodge is led by John Tully, a Metropolitan Police officer, who has given numerous interviews in recent days accusing the Prime Minister of "fighting violence, arson and looting on our city streets with sound-bites". Other founder members include officers from the Metropolitan Police, Essex Police, Thames Valley Police and from other forces including Northumbria, Dyfed Powys, South Wales, South Yorkshire and even a high ranking officer from the Royal Gibraltar Police.

The "Sine Favore" Lodge was opened despite the conclusions of a Parliamentary inquiry which warned of public fears that "Freemasonry can have an unhealthy influence on the criminal justice system". The inquiry followed questions about masonic involvement in the abandonment of an investigation into a shoot-to-kill policy in Northern Ireland and with the West Midlands Serious Crime Squad, which was disbanded after evidence of police malpractice.

Masonic rules require members to do all they can to support each other, to look after each other and to keep each others' lawful secrets. New members of the so-called Brotherhood are blindfolded, a hangman's noose placed around their necks and they are warned their throat will be slit and their tongue torn out if they break their oath. Critics argue this could put them at odds with discharging their duty to serve the public.

The inquiry by the Home Affairs Select Committee in 1998 called for a public register of police officers who joined the Freemasons, although in the end the then Labour government proposed that officers could make voluntary disclosures about their membership. Few did.

"We are still the single best bet in the world, in terms of where to invest," Biden told a university audience in Chengdu, the provincial capital of Sichuan, the southwest province that is the second and last stop of his visit to China. "Please understand that no one cares more about this than we do, since Americans own 87 percent of all our financial assets and 69 percent of all our treasury bonds," Biden said, answering a question about US debt.

"So our interest is not just to protect Chinese investment. We have an overarching interest in protecting the investment, while the United States has never defaulted and never will default. You're safe," he added.

Biden also used his speech to renew US calls for Beijing to do more to rein in North Korea and Iran, whose nuclear ambitions have alarmed the West. "The fact is, China and the United States face many of the same threats and share many of the same objectives and responsibilities," he said. But his key theme was, as it has been throughout his five-day visit to China, economic: that the United States can reverse its high debt and low growth, and that China should play a part by buying more American-made goods and services.

"The economy cannot be measured by the maximum profit but by the common good," Benedict told journalists on the plane taking him to Madrid for a four-day trip centered around the Roman Catholic Church's World Youth Day festivities. "The economy cannot function only with mercantile self-regulation but needs an ethical reason in order to work for man," he said. The Spanish economy is struggling to exit a recession which has left one in five unemployed, of which a large proportion are young people.

Disaffection over government spending cuts, a sickly economy and a lack of job prospects has spawned a protest movement named "Los Indignados" (Indignant Ones) whose young supporters occupied Madrid's Puerta del Sol square in May.

Benedict expressed his solidarity and support for young people faced with an uncertain jobs outlook, but warned of the challenges of consumerism and hedonism and the "widespread trivialization of sexuality" in a speech on his arrival at Madrid's Barajas airport. He reinforced his message later to the young pilgrims in Cibeles square, criticizing people who "create their own gods, believe they need no roots or foundations... letting themselves be led by the whim of each moment."

In a text of the speech released in advance on Saturday, Benedict had written that marriage must be between a man and a woman and called for the respect for life, in apparent criticism of Spain's legalisation of gay marriage and abortion. In Madrid's city center, gay activists staged a protest to defend same sex partnerships, the latest in a series of demonstrations against the visit. He quoted from the Bible definition of marriage in which "a man and a woman become one flesh" and also urged his listeners to be open "to the gift of life" within marriage.

Spain's legalisation of abortion on demand last year and gay marriage in 2005 have stoked tensions between Spain's Socialist goverment and the once overwhelmingly powerful Roman Catholic Church in the country.

In rare comments on British politics since standing down as prime minister in 2007, Mr Blair said the riots were "an absolutely specific problem that requires a deeply specific solution" by politicians. He pointed to a group of people "outside the social mainstream and who live in a culture at odds with any canons of proper behaviour".

"Focus on the specific problem and we can begin on a proper solution," he wrote. "Elevate this into a high-falutin' wail about a Britain that has lost its way morally and we will depress ourselves unnecessarily, trash our own reputation abroad, and worst of all, miss the chance to deal with the problem in the only way that will work." He went on to say: "The key is to understand that they aren't symptomatic of society at large. Failure to get this leads to a completely muddle-headed analysis of what has gone wrong. Britain as a whole is not in the grip of some general 'moral decline'."

"The truth is that many of these people are from families that are profoundly dysfunctional, operating on completely different terms from the rest of society, either middle class or poor. This is a phenomenon of the late 20th Century. You find it in virtually every developed nation." Some people have referred to the rioters as "Blair's children" but the former prime minister is certainly not taking the blame for any "broken Britain".

It happened on the Israeli-Egyptian border as Israeli troops pursued suspected militants who had fired rockets into Israel, killing eight. In response, Israel has carried out a series of air strikes on targets in the Gaza Strip, killing at least 15 people. Palestinian militants have fired more than 20 rockets into Israel since Thursday. The Cairo-based Arab League is to hold a meeting on Sunday to discuss the crisis.

Both the Israeli foreign ministry and defence ministry put out statements expressing regret for the deaths - following consultations between ministers, the military and intelligence officers. They said an Israeli military inquiry would take place, followed by a joint examination with the Egyptian army to determine what went wrong. However these comments are unlikely to satisfy Egypt's interim government. And they have not quelled protests outside the Israeli embassy in Cairo.

In recognition of the dangers of a significant escalation in tensions between Israel and Egypt, the Israeli government has also emphasised its continuing commitment to the 1979 peace treaty signed by the two countries. The defence ministry said this had great strategic importance for the stability of the Middle East.

Vanuatu, a chain of 80 islands with a population of a quarter of a million, is prone to quakes and tsunamis. Several powerful aftershocks later struck the same area, at least one with a magnitude of 7.0. The US Geological Survey earlier said the first quake was of a 7.5 magnitude. It is not clear what damage has been caused. The Pacific Tsunami Warning Center warned of the possibility of more localised tsunamis.

According to the letter, Sarkozy and Merkel want the leaders of the eurozone countries to "elect" a president for the new "economic government". The idea would be that the president would hold twice-yearly summits to address the debt problems that Europe is facing right now. But many pro-EU critics are already howling that Sarkozy and Merkel have not gone nearly far enough. A whole lot of "experts" in Europe are proclaiming that without full economic integration and the creation of "eurobonds", Europe is doomed. Jennifer McKeown, an economist for Capital Economics, put it this way when asked what would happen if eurobonds are not created fairly soon: "The likely outcome is the eurozone ceases to exist".

This is often how huge changes occur in our world today. First a huge problem is created, then there is a negative reaction and then a solution is presented to us. Right now in Europe, the problem is the sovereign debt crisis. We are being told that the only way that the eurozone can survive is if all of the countries agree to much deeper economic integration.

For example, a Daily Mail article entitled "Rise of the Fourth Reich, how Germany is using the financial crisis to conquer Europe" contained the following assessment of what deeper economic integration for Europe would mean.... "This would entail a loss of sovereignty not seen in those countries since many were under the jackboot of the Third Reich 70 years ago. For be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German."

Nigel Farage was also deeply critical of the new proposal by Sarkozy and Merkel...."Bit by bit, eurozone members are losing their sovereignty as the European superstate is created. Nothing in these proposals will calm the markets. I am also prepared to bet that the European political elite will not ask the permission of their peoples via a referendum to make this happen."

But Sarkozy and Merkel seem unconcerned about the critics. In fact, they have announced plans to have a common corporate tax rate by 2013 and to coordinate work on their national budgets.

Venezuela's gold mining was already officially nationalized in 1965, and the new measure means the government will enforce the law more stringently. The reason? Venezuela's central bank already has 63 percent of its reserves in gold, now it wants to add more. It will repatriate the portion of that gold currently held abroad and use its control over the mines to augment its gold holdings. Central bank president Nelson Merentes simply said that this measure reflects "prudence." Chavez put it more bluntly: "Let's convert [gold] into our international reserves because gold is increasing in its value."

Gold is increasing in value because the largest paper money printers in the world like the United States and the European Union are debasing their currencies. It has sustained a steady march upward for a decade at more than 20 percent per year on average in US dollar terms. Foreign central banks like Venezuela's that hold dollars and other reserve currencies are realizing that these depreciate over time, having no collateral behind them, and the best expression of money that holds its value is gold. China, South Korea and Russia are some of the big emerging market economies to recently start supplanting foreign reserves with gold, but Chavez's regime shows that even the socialists are not immune to this free-market trend.

Rather than an innovation, we are witnessing a return to the monetary practice that helped spawn industrial globalization. During the international gold standard of 1873-1913, countries used gold as their final money and settled international payments with it. This meant that trade relationships were balanced and exchange rates were fixed through a neutral asset that held its value. By relying on gold to back up their currencies, countries had an automatic and self-correcting mechanism to prevent financial imbalances.

But the world has woken up since then. Hugo Chavez is just the latest leader to recognize that gold makes for a better monetary asset than Fannie Mae paper. His advisers have also talked about diversifying their foreign currency holdings, which means switching to paper currencies that depreciate less quickly than the dollar and euro. But "the once and future money," as the author Nathan Lewis calls it, is gold.

In building this new generation of chip, IBM combined principles of nanoscience, neuroscience and supercomputing. "This is a major initiative to move beyond the von Neumann paradigm that has been ruling computer architecture for more than half a century," said Dharmendra Modha, project leader for IBM Research. Modha added that the chip may see applications in business, science and government.

"Future applications of computing will increasingly demand functionality that is not efficiently delivered by the traditional architecture. These chips are another significant step in the evolution of computers from calculators to learning systems, signalling the beginning of a new generation of computers and their applications in business, science and government."

But what are the potential real-world applications of this technology? Tsunami warnings for one, claims IBM: "A cognitive computing system monitoring the world's water supply could contain a network of sensors and actuators that constantly record and report metrics such as temperature, pressure, wave height, acoustics and ocean tide, and issue tsunami warnings based on its decision making," said IBM in a statement. On a more practical note, IBM has said that this technology could result in computers that take up far less space and use less power than those in use today.

Earlier, Israeli officials promised a strong response after attacks on vehicles near Eilat left seven dead. Israeli officials said Gazan militants were responsible, although Gaza's Hamas government denied involvement. The Israeli air strike hit a house in the town of Rafah. Palestinian sources told the BBC that four members of the Popular Resistance Committees (PRC), a faction in Gaza that is loyal to Hamas but sometimes operates separately, had been killed in the air strikes, including the group's head, Kamal al-Nairab.

PRC military chief Immad Hammad and the son of the owner of the house were also among those killed, Palestinian sources and residents said. Israeli Prime Minister Benjamin Netanyahu said those killed were responsible for the attacks earlier in the day near Eilat. "The people who gave the order to murder our people and hid in Gaza are no longer among the living," he said in a televised address. "If anyone thinks the state of Israel will resign itself to this, they are wrong."

On Thursday, Morgan Stanley said that the US and Europe were "dangerously close to recession". The falls follow steep losses in the US and Europe on Thursday, and mark a week of declines in global stock markets. In early morning trade, the FTSE 100 index was down 153 points, or 3.1%, at 4939.2. Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said the latest falls meant the FTSE 100 had fallen 16% so far this year, with debt and growth the two major concerns.

"There is a painful realisation that the rhetoric of the policy makers has yet to translate into any definitive plans, which could go some way in assuaging investors' concerns," he commented. "There seems to have been little co-ordinated action in an effort either to spur growth or to put in place a roadmap for dealing with the increasingly difficult debt situation of many developed economies, most notably the US and Europe."

In Asia, South Korea's Kospi dropped 6.2%, while Japan's Nikkei 225 fell 2.4% and Australia's benchmark S&P/ASX 200 index ended down 3.5%. Many analysts are questioning if a bear market - one in which the long-term trend is negative - has now developed and is here to stay. "Bear markets tend to happen when sentiments are low and that comes from weakened demand and bad news flow," Chou Chong of Aberdeen Asset Management told the BBC.

Amid the worries about the state of the global economy, so-called safe haven investments continued to rise, with the spot price of gold hitting a new record high of $1,833.81 an ounce. The Swiss franc rose against the euro, despite recent attempts by the Swiss authorities to weaken it earlier this month.

Experts changed the DNA of chicken embryos in the early stage of their development, enabling them to undo evolutionary progress and give the creatures snouts which are thought to have been lost in the cretaceous period millions of years ago. It has also been claimed that the breakthrough could eventually help eliminate birth defects in human children.

Arkhat Abzhanov, an evolutionary biologist at Harvard University, developed the chickens with snouts by cutting a square hole in the shell of a chicken egg and dropping in a small gelatinous protein bead before watching the embryo develop. The changes allowed separate molecules on the side of the face free to grow into snouts within 14 days. Although ethical rules prevent the eggs from bring hatched, Dr Abzhanov said he hopes to complete the work one day by turning chickens into Maniraptora.

Dr Abzhanov made the changes by analysing the 'signalling molecules' which control the anatomical changes in birds and other animals. Adding protein beads to the egg which stifle the development of certain molecules also prevents the birds from growing certain features.

Maniraptora are small dinosaurs which it is thought spawned thousands of species of birds which exist today. Chickens and other birds are thought to have descended from dinosaurs through a series of genetic changes.

Jack Horner, a leading paleontologist based at the University of Montana, is conducting similar work in an attempt to make a 'chickenosaurus' with a tail and hands similar to those of a dinosaur. Craig Albertson, a developmental biologist at the University of Massachusetts in Amherst, said: "Abzhanov's 'snouted' chicken provides a striking demonstration of just how easy it can be to provoke major evolutionary changes."