Mr Grieve, speaking on the eve of the Conservative Party conference, argued this had led to support for extremism. He also warned against downplaying Britain's Christian heritage.

Mr Grieve told the Guardian: "WE'VE ACTUALLY DONE SOMETHING TERRIBLE TO OURSELVES IN BRITAIN. In the name of trying to prepare people for some new multicultural society we've encouraged people, particularly the sort of long-term inhabitants, to say 'well your cultural background isn't really very important'."

Mr Grieve also said the part played by Christianity in Britain should not be ignored. "THE ROLE OF CHRISTIANITY IS REALLY RATHER IMPORTANT. It can't just be magicked out of the script. It colours many of the fundamental viewpoints of British people, including many who've never been in a church."

A liberal Christian group said that CHURCH TREASURERS THEMSELVES HAVE USED THE CONTROVERSIAL SHORT-SELLING METHODS CONDEMNED BY THE ARCHBISHOPS OF CANTERBURY AND YORK. They said that the Church's financial arm, the Church Commissioners, turned to currency hedging last year to protect some of its £5billion investments.

The Ekklesia think-tank said: 'The archbishops should be extremely careful when attacking City "bank robbers" for short-selling and speculation.' Director Jonathan Bartley added: 'By its own admission it has hedged against a fall in the value of sterling and set up a currency hedging programme in 2006, effectively short-selling sterling in the currency markets.'

The Church's £5billion of holdings, built up over centuries from historic assets, are used to pay clergy stipends and pensions and church running costs.

The storm was located about 645 miles south-southwest of Bermuda, the Miami-based hurricane center said. The storm system drenched Puerto Rico, the Virgin Islands and Hispaniola for days before moving north into the Atlantic. Authorities in Puerto Rico said at least four people were killed and scores of homes were flooded.

Kyle had sustained winds of 45 mph and was moving to the north at about 8 mph, the hurricane center said. Forecasters warned people in Bermuda to closely monitor the progress of the storm. Computer models indicated it could reach hurricane strength within a couple of days.

UPDATE - Freshly upgraded from a tropical storm, Hurricane Kyle is POISED TO STRIKE THE ATLANTIC COAST AT THE US-CANADA BORDER LATE SUNDAY, the National Hurricane Center said. Canada posted a hurricane watch and tropical storm warnings in Nova Scotia and New Brunswick provinces, and a hurricane watch was ALSO IN EFFECT ALONG THE COAST OF THE NORTH EASTERN US STATE OF MAINE.

Lawmakers bickered over competing counterproposals and hours of meetings between key lawmakers broke down without any progress late into the evening. A meeting at the White House between President Bush, congressional leaders and the presidential candidates was meant to speed approval of an agreement. Instead, THE SESSION REVEALED DEEP DIVISIONS BETWEEN DEMOCRATS AND HOUSE REPUBLICANS.

As a result, House and Senate leaders and Treasury Secretary Henry Paulson rushed to Capitol Hill at 8 p.m. to try to hash out a deal. But shortly after 10 p.m., Rep. Barney Frank, D-Mass., the lead House Democrat on the issue who had been in close talks with Paulson for days, accused Republicans of refusing to negotiate. "At this point, we have absolutely no participation or cooperation from House Republicans," Frank said.

The next step was not clear late Thursday night. One thing seems certain: Lawmakers won't recess for the year on Friday, as originally planned. Instead, if they can't reach a deal in the next 24 hours, they're likely to work through the weekend.

On Wednesday night, Bush took the nation's airwaves in a prime-time address in which he laid out a looming economic disaster. "The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," Bush said. "More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically."

Believing that the rescue package sends the wrong signal, experts from the country's leading economics think tanks argue it's the right call. IT'S NOT A CALL FOR ASSISTANCE; IT'S A SCREAM FOR HELP. US Treasury Secretary Henry Paulson is asking other countries to help buy up bad US debt. The US government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system. Some countries are planning to help. BUT THE GERMAN GOVERNMENT HAS ANSWERED THIS CALL QUICKLY AND CLEARLY: NO.

ECONOMICS EXPERTS THINK THAT'S THE RIGHT RESPONSE. As they see it, in the long run, those responsible for the crisis - who have been cashed out with high salaries and bonuses for years - will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on their feet and thereby standing in the way of a market cleanup.

Beijing is battling public alarm and international dismay after thousands of Chinese children were hospitalised, sick from infant milk formula tainted with melamine, a cheap industrial chemical that can be used to cheat quality checks.

A European Commission spokeswoman said EU authorities would test 100 percent of products from China containing more than 15 percent of milk powder, and would ban all products for children and young people containing any proportion of milk.

This came as the World Health Organisation and UNICEF issued a joint statement saying the deliberate contamination of food for infants and young children was "particularly deplorable". Nitrogen-rich melamine can be added to substandard or watered-down milk to fool quality checks, which often use nitrogen levels to measure the amount of protein in milk. The chemical is used in pesticides and in making plastics.

The Wall Street investment bank astounded its rivals by raising $10 billion in fresh capital — $5 billion from Berkshire Hathaway, Mr Buffett's main listed company, and $5 billion through a public share offering. Shares in Goldman rose 6 per cent to $133.00, giving Berkshire an instant theoretical profit on a side deal, under which it has warrants to buy up to $5 billion of new Goldman shares at $115 a share at any time in the next five years.

Analysts said that the decision by Mr Buffett, widely regarded as one of the world's most astute long-term investors, to take the plunge in financial stocks — having passed on previous capital-raisings by banks — might come to be seen as the turning point in the financial crisis.

"THE US WILL LOSE ITS STATUS AS THE SUPERPOWER OF THE WORLD FINANCIAL SYSTEM. This world will become multi­polar" WITH THE EMERGENCE OF STRONGER, BETTER CAPITALISED CENTRES IN ASIA AND EUROPE, Mr Steinbrück told the German parliament. "THE WORLD WILL NEVER BE THE SAME AGAIN."

His were the most out­spoken comments by a senior European government figure since Wall Street fell into chaos two weeks ago. He later told journalists: "WHEN WE LOOK BACK 10 YEARS FROM NOW, WE WILL SEE 2008 AS A FUNDAMENTAL RUPTURE. I am not saying the dollar will lose its reserve currency status, but it will become relative." The minister, who has spearheaded German efforts to rein in financial markets in the past two years, attacked the US government for opposing stricter regulations even after the subprime crisis had broken out last summer.

Mr Steinbrück's proposals include a ban on "purely speculative short selling"; a crackdown on variable pay for bank managers, which had encouraged reckless risk-taking; a ban on banks securitising more than 80 per cent of the debt they hold; international standards making bank managers personally responsible for the consequences of their trades; and increased co-operation between European super­visors.

The automotive loans are separate from the proposed $700bn bail-out for the banking sector. The House approved the measure 370-58, setting the stage for Senate approval within days. The industry's case has been helped by the fact that Michigan and Ohio, the two states most dependent on the car industry, are key swing states in the November 4 presidential election.

Executives of General Motors, Ford Motor and Chrysler and their suppliers have lobbied heavily for the loans. Both presidential ­candidates, John McCain and Barack Obama, have expressed support.

Shelly Lombard, analyst at Gimme Credit, a corporate bond research company, told clients this week that "blue collar workers are more sympathetic victims than 'rich' investment bankers. So it's easier to defend loans designed to save close to 100,000 jobs in the shrinking US manufacturing industry." The loans were originally authorised in an energy bill passed last December to finance the retooling of plants for more fuel-efficient vehicles, especially hybrid and electric cars. But they have become a crucial prop for Detroit carmakers.

A small notice taped to the window on this Friday afternoon in mid-July tells her why she's been locked out. IndyMac has failed, the single-spaced, letter-sized paper says; the bank is now in the hands of the Federal Deposit Insurance Corp. "The Receiver is now taking possession of the Bank," the sign says. "I'm physically shaking," says Horn, an academic tutor, as she peers into the bank. Inside, an FDIC examiner is talking to six stone-faced IndyMac employees. "I don't know when I'm going to be able to get my money," Horn says. "I'm a single mom. This is the money I live on." Don't worry about Horn. She'll be all right, as will most of Pasadena, California-based IndyMac's 200,000-plus customers.

That's because the FDIC, created in 1934, insures all accounts up to $100,000 at its member banks, and it has never failed to honor a claim. The people to worry about are U.S. taxpayers. The IndyMac debacle is taking a large bite out of FDIC reserves, and if scores of other banks fail in the year ahead, the fund will be depleted. Taxpayers will have to step in.

BY THE END OF 2009, ABOUT 100 U.S. BANKS WITH COLLECTIVE ASSETS OF MORE THAN $800 BILLION WILL FAIL, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors.

The economy had shrunk by 0.3% in the first quarter of the year. Technically, a recession is defined as two or more successive quarters of negative growth. It is the first time Ireland has experienced a recession since 1983. The economy is now facing its most difficult period since high unemployment and emigration hit in the early 1980s.

Economists pointed to the collapse of a decade-long bonanza in Ireland's property market, coupled with a slump in construction activity. The global credit crunch has also been a factor behind the rapid economic slowdown. IT MEANS IRELAND IS THE FIRST EUROZONE ECONOMY TO SLIP INTO RECESSION THIS YEAR. The country has enjoyed a boom since the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in Europe.

Bloxham Stockbrokers chief economist Alan McQuaid said: "Although the domestic side of the economy is contracting at a significant rate, the external side - the multinationals - is holding up quite well, but one would have to question how long that's going to last."

The Shenzhou VII capsule soared into orbit atop a Long-March II-F rocket from the Jiuquan spaceport in Gansu province in the northwest of China. The 70-hour flight will include a spacewalk undertaken by 42-year-old fighter pilot Zhai Zhigang. Mr Zhai is joined on the mission by two other "yuhangyuan" (astronauts) - Liu Boming and Jing Haipeng.

China's president Hu Jintao met the three astronauts before the lift-off, wishing them success on the nation's riskiest space mission yet. "You will definitely accomplish this glorious and sacred mission. The motherland and the people are looking forward to your triumphant return," President Hu told the yuhangyuan, who were dressed in flight suits and behind glass to avoid being exposed to germs.

The rocket will put the Shenzhou capsule in a near-circular orbit more than 300km above the Earth. Mr Zhai will conduct his extra-vehicular activity (EVA) on either Friday or Saturday. Dr Roger Launius, senior curator at the National Air and Space Museum in Washington DC, told BBC News: "It is a demonstration of technological virtuosity. IT'S A METHOD OF SHOWING THE WORLD THEY ARE SECOND TO NONE - WHICH IS A VERY IMPORTANT OBJECTIVE FOR CHINA."

Earlier this week, Pakistani troops fired warning shots at US helicopters near the border, local officials said. And on Wednesday, a drone believed to be operated by the CIA crashed inside Pakistan. Local tribesmen in the area told the BBC that two helicopters were trying to cross into Pakistani territory near Ghulam Khan, in North Waziristan, when Pakistani troops at posts near the border fired at them.

Major Murad Khan, of the Pakistani military, told the BBC that they were still checking the incident. Correspondents say there is growing anger in Pakistan at US forces in Afghanistan allegedly violating Pakistani sovereignty.

The BBC's Syed Shoaib Hasan says that the border between Afghanistan and Pakistan is very unclear. There is an imaginary border called the Durand line which each side marks differently. Our correspondent says that, in reality, the border is marked by a 3-4km (1-2 miles) stretch of no man's land. Pakistan says this is its territory and Afghanistan makes similar claims.

THE ENTIRE ECONOMY WAS IN DANGER, he said in a live TV speech, and failure to act now would cost more later. He has invited presidential rivals John McCain and Barack Obama to the White House on Thursday to discuss the $700bn (£378bn) rescue package. The rivals have disagreed on delaying a TV debate over the economic turmoil.

Mr McCain says he is suspending his campaign to help with the crisis, but Mr Obama says voters now need to hear from the candidates more than ever. The two men will attend a meeting with administration officials and congressional representatives on Thursday morning in the US capital in a bid to broker a mutually acceptable bail-out deal.

Mr Bush made his comments in an evening address to the nation. Major sectors of America's financial system were at risk of shutting down, he said, and without action a "distressing scenario" would unfold. His administration is calling on Congress to approve a costly bail-out - under which the Treasury would use public money to buy bad debt from troubled financial institutions - as soon as possible.

But lawmakers from both the Democratic and Republican parties have voiced doubts about the plan and the speed at which they are being asked to approve it. They want assurances that it will benefit ordinary American home-owners as well as Wall Street, and be subject to adequate oversight. Mr Bush said he understood the frustration of "responsible Americans" who "are reluctant to pay the costs of excesses on Wall Street".

"But given the situation we're facing, not passing a bill now will cost these Americans much more later," he said, calling for a bipartisan commission to oversee the plan.

It follows a speech to bankers by the Archbishop of York, Dr John Sentamu. In it, he called share traders who cashed in on falling prices "bank robbers and asset strippers". In the piece which is due to be published in the magazine on Friday, Dr Williams attacks "unbridled capitalism" and defends the socialist theorist Karl Marx's critiques of the system.

He said it had become - much as Marx suggested - "a kind of mythology" in which people invested their faith, wrongly assuming it would work for the common good. He urges that "short-selling" and some other financial practices be banned and wrote: "It is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to."

He accepts the need and desire for entrepreneurship but claims it is not the only way to create wealth. He denounces the notion that it is a type of "fundamentalism". On Wednesday Dr John Sentamu told bankers the market system seems to have taken rules "from Alice in Wonderland". The Archbishop also noted the contrast between the US government bank bail-out and the lack of funding for efforts to reduce poverty.