The announcement came ahead of a meeting with the bosses of the big five UK high street banks. The banks are understood to want the Bank of England to pump even more cash into the system. Both the European Central Bank and the US Federal Reserve have made much more money available to their banks. This week's additional funding, released on Thursday, was three times oversubscribed.

No details of the talks between the bank bosses and Mervyn King have been disclosed, but the Bank of England issued a short statement. "The Bank of England and the banks agreed to continue their close dialogue with the objective of restoring more orderly market conditions," it said. The banks represented were HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS.

HBOS shares were among the top gainers on the London Stock Exchange on Thursday, up 6.2% recovering most of their falls from the previous day. On Wednesday, the Financial Services Authority (FSA) said it would "not tolerate" traders starting "false" rumours about firms to make cash from dealing in their shares.

The tax was customary during the times of the first and second Temples, and is described in the Torah portion "Ki Tisa" in the book of Shemot (Exodus). The coin is believed to date back to the Second Temple period.

The discovery was made shortly before the holiday of Purim, when Jews give a sum of money as a reminder of the ancient half-shekel tax. While the ancient tax was used to pay for the upkeep of the Temple, the modern sum is traditionally donated to the needy.

"These accusations are totally unfounded," the chief Vatican spokesman Rev. Federico Lombardi told Reuters, in response to an audio recording by bin Laden which was posted on the Internet to coincide with the birthday of the founder of Islam.

Lombardi said bin Laden's accusations were not surprising. "It is natural to think that he would lump the Vatican and the Pope together with all his perceived enemies. But this is not correct," he said. He recalled that the Pope himself had been quick to condemn the Danish cartoons and had launched a wider criticism of depictions of religious figures that offend members of different faiths.

He also pointed out that Pope Benedict, who himself deeply offended many Muslims with a 2006 speech depicting Islam as a violent faith, recently set up a permanent official dialogue with Muslim leaders.

Wouter Bos, Dutch finance minister, is set to be heavily outvoted at a meeting of his peers on Tuesday to pass the 2006 budget of €107bn (£80bn, $155bn), in spite of huge errors found by auditors last year in the four-fifths of money that is spent nationally. Mr Bos, backed by the European Commission and members of the European parliament, aims to press states to provide proof that the money was well spent. The Commission has threatened to suspend billions of euros worth of payments or take legal action if they do not provide such proof.

Mr Bos, who last year became the first finance minister to sign an annual statement that EU agricultural spending had been audited, has said he will vote against discharge of the budget. "An improvement needs to be made in accounting for EU money, and much more work needs to be done by member states," a Dutch government spokesman told the Financial Times. "This is an issue for member states more than the Commission."

Stocks in Halifax Bank of Scotland slumped by more than 17 per cent yesterday morning as SPECULATORS SPREAD MALICIOUS AND FALSE RUMOURS ABOUT THE BANK'S IMMINENT COLLAPSE. The drama started to unfold at 8.31 when shares in HBOS began to wobble. What followed was one of the most remarkable morning's trading in recent stock market history.

THERE WERE UNCONFIRMED REPORTS LAST NIGHT THAT ONE TRADER HAD MADE £100MILLION FROM THE COLLAPSE IN HBOS SHARES. Britain's financial watchdog immediately launched a criminal investigation into the "modern day bank robbers" who collectively helped to wipe more than £3billion off the bank's value. The Financial Services Authority warned them to stop exploiting jittery market conditions. The rumour-mongering is now known to have fuelled the extreme market turbulence of the last few days.

The collapse of HBOS, which has more than two million small shareholders, would be an almost unimaginably enormous financial disaster, hence the share price crash when the City was swamped with wild rumours that it was on the brink of disaster yesterday. The Bank of England was forced to issue a statement insisting that there was no reason to panic and that it had not given emergency help to the bank. HBOS added to the condemnation heaped on the traders who caused the disastrous plunge in its share price.
A senior HBOS executive said: "THIS IS THE MODERN DAY VERSION OF BANK ROBBERY."

In an audio recording posted on the Internet coinciding with the birthday of Islam's founder, bin Laden said the drawings, considered offensive by Muslims, were part of a "new crusade" in which Pope Benedict was involved. "Your publications of these drawings - part of a new crusade in which the Pope of the Vatican had a significant role - is a confirmation from you that the war continues," said the Saudi-born militant leader, addressing "those who are wise at the European Union."

You are "testing Muslims - the answer will be what you shall see and not what you hear." The message, produced by al Qaeda media arm As-Sahab in the lunar month which ended on March 8, carried an animation of a spear piercing through a red map of Europe with blood splashing as its tip penetrated the surface.

It also carried what appeared to be an old picture of bin Laden firing an assault rifle. The message also coincides with the fifth anniversary of the U.S.-led invasion of Iraq. Michael Scheuer, a former CIA bin Laden tracker, said: "It's not a coincidence that it was released on the day that is observed in the Muslim world as the Prophet's birthday." He added: "It's only ominous when he says 'don't listen to our words, watch for our actions' ... that means they clearly are intending to attack in Europe."

The Financial Services Authority said it had started an investigation into whether some traders spread rumors about British financial institutions over the last few days and might have profited from the decline in the stocks' share prices. Separately, the Bank of England, which almost never makes public statements about specific lenders, denied rumors that it met or scheduled to meet with executives at a British bank to discuss potential liquidity problems.

"It reveals how nervous the authorities are that rumors can actually bring serious problems to a financial institution," said Alistair Milne, senior lecturer at Cass Business School in London. Trading rooms were buzzing with rumors Wednesday morning that HBOS, the largest mortgage lender in Britain, was in trouble. The speculation had wiped about £3 billion, or $6 billion, off its market value before the Edinburgh-based lender could deny them, saying it had "ready access" to funding.

"They are trying to stamp on malicious rumors and foul play, but it's difficult because the markets have always worked on rumors," said Keith Bowman, equity analyst at Hargreaves Lansdown, a stockbrokerage firm in London. "Especially in a down market, the fact that investors can equally make money by taking short positions has accelerated the rumor mills."

We were told that this was THE NEW WORLD, the prime source of British wealth generation in the 21st century, CONDUCTED BY YOUNG CENTURIONS WHO WERE MASTERS OF THEIR UNIVERSE. According to the pundits, the rest of us should not carp at their riches because their skills were indispensable to our future. The rest of us would, in effect, be dependent upon crumbs from their banquet table to pay our wages in the decades ahead.

We watched hedge-fund kings down their £1,000 bottles of claret, chief executives play in the contest to rival each other's multi-million salaries. WE ASSUMED THAT THEY KNEW WHAT THEY WERE DOING. TODAY, OF COURSE, WE SEE THAT THEY MOST CERTAINLY DID NOT. The men and women responsible for the conduct of the West's financial SYSTEM HAVE LANDED THEMSELVES, AND ALL OF US, IN AN EPIC MESS OF WHICH NOBODY DARES TO FORETELL THE OUTCOME.

It is scarcely surprising that we feel bitter. There seems every likelihood that, AFTER THEY COLLECTED HUGE REWARDS ON THE WAY UP, IT WILL BE UP TO US TO PAY THE BILLS FOR THEIR FOLLIES ON THE WAY DOWN. Most of us with variable pensions or savings pay an annual 2 per cent fee to the wizards who manage them - who, in turn, are also entitled to a healthy cut of any increases they achieve. But nowhere in the small print is there provision for THE SAME CLEVER PEOPLE TO ACCEPT A SHARE OF OUR LOSSES WHEN PENSIONS AND SAVINGS HEAD SOUTH, AS THEY SURELY WILL.

For years, banking kings on both sides of the Atlantic have argued that the free market is the great wealth-creator; that government regulators should keep their meddling hands off Wall Street and the City because capitalism works best when the experts are left to get on with it. Yet the moment the Western financial system falters, indeed staggers on the edge of a precipice, BANKERS FLEE IN TERROR - HOPING THAT THE STATE WILL BAIL THEM OUT. That means us. British taxpayers have a £25 billion-plus exposure to Northern Rock.

In America, the U.S. Federal Reserve is now being obliged to offer guarantees, the costs of which might prove huge, even though JP Morgan has accepted the risk of buying the collapsing investment bank Bear Stearns. Unfortunately, those of us who live and work outside the City magic circle cannot allow ourselves the dance of glee we would normally enjoy when money moguls are discredited. For today, everybody's affairs are now so inextricably entwined with those of the financial world that if they suffer, so assuredly shall we all.

Now is the moment, surely, for local authorities to shed their armies of gender counsellors and lifestyle advisers, health and safety storm troopers, community service experts. A nation soon to be short of cash should be urgently addressing the social security budget, slashing discretionary spending, management consultants, ill-judged computer projects. What a moment for London to be lumbered with hosting the Olympics!

However, RATHER THAN REAL SPENDING CUTS, WE ARE LIKELY TO SEE A HUGE RISE IN TREASURY BORROWING SUCH AS WILL BURDEN THE COUNTRY AND HOBBLE FUTURE GOVERNMENTS FOR YEARS. Whichever party wins the next General Election will soon wish that it had not. Some time - probably after two or three nasty years - we can expect things to get better again. It would be nice to suppose that this experience would chasten the hedge-fund kings and banking geniuses who have created this shambles. FAT CHANCE! MASTERS OF THE UNIVERSE DO NOT DO HUMILITY.

The initial trigger for the dollar's slide in recent years had been THE LARGE DEFICITS IN SPENDING AND TRADE, analysts said, but as long as they were funded by investment flows into U.S. dollar-denominated assets few were worried about the long term. But with a slowing economy and increasing concerns about the stability of the U.S. financial system amid widening losses on credit defaults, dollar-denominated securities are becoming less attractive to investors, reducing the demand for dollars to fund such investments.

"That's one of the main concerns: that the sell-off in the dollar reaches the point where foreign investors would start selling most of their positions, and then we would really have funding problems," said Omer Esiner, a market analyst at Ruesch International in Washington, D.C. The New York Board of Trade's U.S. dollar index .DXY, which measures the dollar against a basket of currencies, FELL 8.4 PERCENT IN 2007, for a second year of declines after LOSING 8.2 PERCENT IN 2006. The dollar index is DOWN 6.2 PERCENT IN 2008 despite strong gains on Tuesday after the Fed cut interest rates by 75 basis points.

But while the dollar's drop has stoked exports as expected, because it makes U.S.-made goods and services cheaper in the global trading arena, imports have not fallen far enough. Total U.S. exports have climbed 15.6 percent in the last year to $636.55 billion, according to the Commerce Department. But total imports have also risen 8.8 percent to $781.44 billion. The euro has gained 32 percent against the dollar since the end of 2005, while the dollar fell 15.4 percent against the yen, at current prices.

The January international trade report, with trade accounting for the bulk of the current account, showed a deficit of $58.2 billion for the month, according to a report released earlier this month. BUT IN A CLEAR SIGNAL OF WHAT THE FUTURE MAY HOLD, net overall capital flows into the U.S. in January fell to $37.4 billion in January, a four-month low, as PRIVATE INVESTORS SHUNNED U.S. ASSETS, data from the U.S. Treasury Department showed on Monday.

Compounding the problem, THE DOLLAR'S DROP HAS ALSO HELPED PUSH UP OIL PRICES TO A RECORD HIGH OVER $111 A BARREL, adding to inflation pressures as the Federal Reserve aggressively cuts interest rates to stoke economic growth. "IT'S A DANGEROUS BALANCING ACT," said Andrew Bekoff, chief investment strategist at Meyers Associates L.P. The Fed believe this outweighs the risk of inflation in the short term. "Putting growth over inflation in the short term and cutting interest rates, however, also reduces the attractiveness of U.S. assets and ADDS TO THE RISK THAT INVESTORS AROUND THE WORLD WILL STOP FUNDING THE U.S. DEFICIT."

CREDIT DEFAULT SWAPS (CDS) ARE BETS ON WHETHER A COMPANY WILL DEFAULT ON ITS DEBTS.

About two dozen big banks are major broker-dealers in the CDS market, which means they take one side of nearly every contract. The failure of a dealer such as Bear Stearns would threaten the entire CDS market and other derivatives markets. A bank that has made a loan to a company can buy protection to ensure it is paid even if the company defaults. The seller of protection receives an annual fee for promising to cover losses in the event of a default.

The derivatives market can amplify fears or rumours as people rush to buy protection on a name such as Bear Stearns, and drive its spreads wider in a vicious spiral, increasing the risks a bank could suffer a liquidity crunch. OTHER RISKS COME FROM THE BANKS' PACKAGING OF CDS INTO COMPLEX CREDIT PRODUCTS, which started in a big way in 2005. Banks took positions on hundreds of billions of dollars of CDS contracts solely to create other products to sell. BUT THESE PRODUCTS ARE NOW DISCREDITED.

Regardless of the risks added by the derivatives market, CDS continue to play a key part in the defences that banks and investors are constructing. "That's the only way that there is to hedge," said one trader in London after CDS indexes rose to record wide levels in the wake of the Bear Stearns rescue.

But what happened in previous financial crises, and what are the lessons for today? There have been a growing number of financial crises in the world, according to the International Monetary Fund (IMF).

Among the key lessons of previous major financial crises are:

- Globalisation has increased the frequency and spread of financial crises, but not necessarily their severity
- Early intervention by central banks is more effective in limiting their spread than later moves
- It is difficult to tell at the time whether a financial crisis will have broader economic consequences
- Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.

THE DOT.COM CRASH, 2000 - During the late 1990s, stock markets became beguiled by the rise of internet companies such as Amazon and AOL, which seemed to be ushering in a new era for the economy, despite the fact that few of the firms actually made a profit. The Fed cut interest rates throughout 2001, lowering rates from 6.25% to 1% to stimulate economic growth.

LONG-TERM CAPITAL MANAGEMENT, 1998 - The collapse of hedge fund Long-Term Capital Market (LTCM) occurred during the final stage of the world financial crisis that began in Asia in 1997 and spread to Russia and Brazil in 1998.

THE CRASH OF 1987 - US stock markets suffered their largest peacetime one-day fall yet on 19 October 1987, when the Dow Jones Industrial Average index of shares in leading US companies dropped 22% and European and Japanese markets followed suit. The losses were triggered by the widespread belief that insider trading and company takeovers on borrowed money were dominating the markets, while the US economy was entering into an economic slowdown.

US SAVINGS AND LOAN SCANDAL, 1985 - US Savings and Loans institutions were local banks which made home loans and took deposits from retail investors, similar to building societies in the UK. By 1985, many of these institutions were all but bankrupt, and a run began on S&L institutions in Ohio and Maryland. The cost of the bail-out eventually totalled about $150bn.

THE CRASH OF 1929 - The Wall Street crash of 1929, "Black Thursday," was an event that sent the US and indeed the global economy into a tailspin, contributing to the Great Depression of the 1930s. After a huge speculative rise in the late 1920s, based partly on the rise of new industries such as radio broadcasting and car making, shares fell by 13% on Thursday, 24 October, and fell by another 11% the following Tuesday, 29 October. By the time the market had reached bottom in 1932, 90% had been wiped off the value of shares. IT TOOK 25 YEARS BEFORE THE DOW JONES INDUSTRIAL AVERAGE RECOVERED TO ITS 1929 LEVEL.

OVEREND & GURNEY, 1866; BARINGS, 1890 - The failure of a key London bank, Overend and Gurney, in 1866 led to a key change in the role of central banks in managing financial crises. As a result, reformers advocated a new role for the Bank of England as the "LENDER OF LAST RESORT" to provide liquidity (cash) to the financial system during crises, in order to prevent a failure of one bank spilling over and affecting all the others ("systemic failure"). The new doctrine was implemented in the Barings Crisis in 1890, when losses by a leading UK bank, Barings, made on its investments in Argentina, were covered by the Bank of England to prevent a systemic collapse of UK banking. Secret negotiations by the Bank and London financiers led to the creation of an £18m rescue fund in November 1890, before the extent of Barings' losses became publicly known.

The rate decline of 0.6 percent in 2006 compared to 2005 was so modest that the increase in the world's population meant there were actually more TB cases globally, the World Health Organization said in its annual report on tuberculosis. And WHO officials cited worrisome trends suggesting that recent progress was stalling, while saying more money is needed to fight TB, WHICH TRAILS ONLY AIDS AS THE WORLD'S LEADING KILLER AMONG INFECTIOUS DISEASES.

By region, AFRICA HAD THE HIGHEST TB RATES WHILE ASIA HAD THE MOST CASES. By nation, India had the most cases, followed by China, Indonesia, South Africa and Nigeria, according to the report based on data from 202 countries and territories. "We're really in a very uncertain situation, so I don't feel happy at all, actually, that it is really getting controlled," Dr. Mario Raviglione, who heads WHO efforts against TB, told reporters in a conference call. "The major concern is that there is a slowdown here, rather than an acceleration, in TB control efforts," Raviglione said.

The data came out a month after another WHO report showed that TB CASES THAT DEFY EXISTING DRUGS WERE OCCURRING GLOBALLY AT THE HIGHEST RATES EVER, WITH NEARLY 490,000 CASES IN 2006. Parts of the former Soviet Union were particularly vulnerable. TB is an infectious bacterial disease typically attacking the lungs. THE EMERGENCE AND SPREAD OF DRUG-RESISTANT GERMS MAKES TREATING IT MUCH HARDER AND COULD MAKE IT EVEN DEADLIER.

The investigative committee said the money was paid as the administration said it was trying to improve the poorly performing power industry. Committee chairman Ndidi Elumelu said the 34 companies were not registered and so did not exist. The panel was established earlier this year to find out what happened to money spent on improving power generation between 1999 and 2007.

President Umaru Yar'Adua has said $10 billion was spent with little sign of improvement to electricity supplies. NIGERIA IS A BIG EXPORTER OF OIL BUT SUFFERS FROM SEVERE ENERGY SHORTAGES WHICH PRODUCE FREQUENT ELECTRICITY CUTS.

Electricity generation remains at a fraction of the amount needed by A COUNTRY OF 140 MILLION PEOPLE. The effect on Nigeria, a regional superpower, has been economically devastating both for businesses and individuals, says the BBC's Alex Last in Lagos. Mr Yar'Adua has promised to declare "a national emergency" on power, but our correspondent says not much has happened yet.

Of the other aims, one was unobtainable because Iraq had no weapons of mass destruction to be destroyed, and the other - bringing democracy to the Middle East - has been indefinitely postponed. More importantly, THE WAR HAS SHOWN THE LIMITS OF AMERICAN POWER. It is clear THE UNITED STATES CAN ONLY MANAGE TO FIGHT TWO SMALL WARS AT A TIME. IRAQ AND AFGHANISTAN HAVE STRETCHED THE US ARMED FORCES ALMOST TO BREAKING POINT. AMERICA AFTER THE INVASION OF IRAQ IS NO LONGER THE SUPERPOWER IT WAS BEFORE.

Now, the American forces are engaged in fighting a rearguard action, winning time during which the long-term decisions can be taken about withdrawal or some form of continuing presence here. Some people will no doubt call this rearguard action a success. Some may even be tempted to call it a victory. Yet at present it is hard to think of it as particularly successful. On Monday, Vice-President Dick Cheney came to Baghdad and talked about "the phenomenal improvement in security". That day more than 60 Iraqis were killed in bomb attacks. None of this feels like a phenomenal improvement in security.

But this is small compared with THE DAMAGE WHICH THE WAR HAS DONE TO AMERICA'S REPUTATION. The US state department finds it much harder nowadays to be taken seriously when it criticises other countries for their use of torture and arbitrary arrest. People the world over have been repelled by things that have been done here: things that are now associated with place-names like Abu Ghraib, Haditha, and Falluja.

ABOVE ALL, WE HAVE SEEN HOW HARD IT IS FOR THE AMERICANS TO DEAL WITH A FEW THOUSAND LIGHTLY ARMED VOLUNTEERS. Germany's 19th-Century Chancellor, Otto von Bismarck, said that "GREAT POWERS HAD TO BE VERY CAREFUL WHEN THEY PUT THEIR MILITARY STRENGTH TO THE TEST." Unless they are overwhelmingly successful, he meant, the perception will be that they have been defeated.

IN SPITE OF THE NEW SUCCESSES ON THE GROUND HERE, THAT IS THE LONG-TERM DANGER AMERICA FACES.

Environmental groups called the process crazy and said it involved thousands of unnecessary and wasteful "food miles". Vicki Hird of Friends of the Earth said: "Consumers thinking they are buying greener, local and Scottish are actually buying pretty travel-sick chicken. How many more unnecessary food miles do Tesco's centralised, mass-produced systems result in?"

Richard Watts, campaign director at the pressure group Sustain, said: "It is an illogical thing to do and the carbon emissions that result will be extremely damaging to the environment. Considering the significant contribution of the food industry to the UK's greenhouse gas emissions, this kind of practice should be the first to go if companies such as Tesco are serious about their overall responsibility in relation to the climate change crisis."

Green campaigners have called on consumers to cut down on the food miles required to ship global products to Britain, including exotic fruit and vegetables. But Tesco said it was forced to send its chicken portions on the long-distance journey because of the closure of a packaging plant in Scotland.