Labor Department figures showed the number of people seeking unemployment benefit had leapt by the largest amount since February. The data boosted expectations that US interest rates could be cut further before the end of the year.

In afternoon trading on Wednesday, the euro hit a high of $1.4305, before pulling back slightly. It broke the previous record, set on 1 October, when one euro bought $1.4282.

The treaty is designed to replace the European Constitution that was rejected by French and Dutch voters in 2005. It includes plans for an EU foreign policy supremo, a longer-term president and fewer national veto rights. Officials are upbeat that a deal can be clinched in the Portuguese capital, but several countries still have concerns about some clauses of the document. Agreement at the two-day summit would end one of the most serious crises in the EU's history after the rejection of the constitution, the BBC's Oana Lungescu in Lisbon says.

"I hope this will not be the battle of Lisbon," European Commission President Jose Manuel Barroso said on the eve the talks. "We have a very good agreement on the table, the best on offer," he said. Portuguese Prime Minister Jose Socrates, whose country currently holds the EU presidency, said EU leaders were "getting very close indeed to a new treaty which will be called the Lisbon Treaty".

If the EU leaders approve the new text by Friday, they could formally sign it in December. Member states will then have a year to ratify the treaty so that it could come into effect, as planned, in January 2009. Despite Mr Brown's pledge to defend Britain's many opt-outs from the treaty, there are growing demands for a referendum. A poll published on Thursday shows that a majority of people in the EU's five biggest countries, including Britain, would like to have a say, although they are unlikely to get it.

The event, taking place in Vienna, then Linz and Graz, will allow would-be divorcees to consult lawyers about their rights and seek advice. The divorce rate in Austria hit an all time high of 50% in 2006, with 66% of marriages in Vienna ending in divorce. The two-day fair is being held under the motto "New beginning".

The Vienna event takes place over 27-28 October, with Saturday reserved for men, and Sunday for women, so couples can avoid awkward encounters and retain a degree of anonymity. Organiser Anton Barz says it is a world first and hopes it will become a twice-yearly event.

"Until now, I organised wedding fairs but while talking to associations and lawyers who told me about the difficulties of divorce, I had this idea," he said. Up to 20 exhibitors have registered so far, not only lawyers and mediators, but also estate agents, life-crisis experts, private detective firms and DNA laboratories offering paternity tests. One company will offer therapeutic package holidays for newly divorced people.

There will also be a series of lectures on subjects like how divorce affects children and coping as a single parent.

Apart from the dollar, the IMF's economists also think sterling is overvalued, while the Japanese yen and the Chinese renminbi remain too cheap compared with other currencies. In some of its strongest language to date, the fund's officials call on China to let its currency appreciate. Repeating its demand for "greater flexibility" of China's managed currency, the IMF added that such action was in China's best interests.

"Further upward flexibility of the renminbi, along with measures to reform the exchange rate regime and boost consumption, would also contribute to a necessary rebalancing of demand and to an orderly unwinding of global imbalances," the World Economic Outlook argued.

Even with slower growth forecast for the US and a weaker dollar, the IMF sees little improvement in the world's huge trade imbalances, embodied in the US trade deficit and corresponding surpluses in Asia and in oil exporters.

THE FUND THINKS THAT THE US CURRENT ACCOUNT DEFICIT WILL REMAIN CLOSE TO 1.5 PER CENT OF WORLD OUTPUT UNTIL 2012, RAISING THE LIKELIHOOD OF A DISORDERLY PLUNGE IN THE DOLLAR AND PROTECTIONISM GROWING OVER THE NEXT FEW YEARS.

The International Monetary Fund says that British property is even more inflated than in the US before prices plummeted - a disaster that caused turmoil in stock markets and saw many thousands lose their homes. In its half-yearly health check on the global economy, the IMF singles out three nations at severe risk.

"Housing markets have boomed in a number of fast-growing countries, most notably Ireland, Spain and the UK," it says. London would bear the brunt of any crash. The IMF added: "The extent of house price over-valuation may be considerably larger in some national markets in Europe than in the US, and there would clearly be a sizeable impact on the housing markets in the event of a widespread credit crunch."

In America, the collapse in housing prices and a rise in borrowing costs saw many home owners unable to keep up repayments on mortgages.

We've got a leader in Iran who has announced that he wants to destroy Israel," Bush said at a White House press conference after Russia cautioned against military action against Tehran's supect atomic program. "So I've told people that, if you're interested in avoiding World War III, it seems like you ought to be interested in preventing them from having the knowledge necessary to make a nuclear weapon," said Bush.

The EU's trade relationship with China is "deeply unequal", its trade commissioner Peter Mandelson has said.

In a frank letter to the European Commission president, he suggested that China took business in Europe for granted. China is now the EU's biggest source of manufactured goods.

But Mr Mandelson said that tariff barriers and Chinese interventions were limiting how much the EU sold to the Asian giant - costing firms billions. The letter added that the Chinese were "procedurally obstructive" where dialogue had been set up.

THE EU SOLD MORE GOODS TO SWITZERLAND THAN IT DID TO CHINA, the letter to Jose Manuel Barroso said, adding that THE TRADE DEFICIT BETWEEN THE EU AND CHINA WAS GROWING AT ABOUT £10M EVERY HOUR. "The Chinese juggernaut is, to some extent, out of control," Mr Mandelson added.

The BBC's Jonny Dymond, who has seen the letter, says that the trade commissioner 's letter "effectively accuses China of taking the mickey. The message behind the letter looks pretty clear - that Europe has rolled over long enough," our reporter added.

Mr Mandelson told the BBC that pressure from the public and politicians for a level playing-field of trade was growing. "If we want to sustain a policy of openness towards China politically, we have to make sure that the public is satisfied that that trading relationship is being conducted on full and fair trade, otherwise we are going to be in trouble."

China was "shifting the economic and diplomatic scenery so fast that it is almost impossible for policy makers to keep up let alone be ahead of the game", he added. "Because of China's extraordinary economic growth as well as its political and diplomatic reach, and the effect it can have on global security, we are seeing China changing the whole global landscape in so many different ways."

The vote overshadowed a U.S. government report that crude oil and gasoline inventories overall rose more than expected last week. But prices did draw some support from a 200,000 barrel decline in inventories at the closely-watched New York Mercantile Exchange delivery terminal in Cushing, Okla. Light, sweet crude for November delivery rose $1.09 to $88.69 a barrel on the Nymex after rising to a record $89 earlier.

Oil prices initially fell after the Energy Information Administration reported that crude inventories rose by 1.8 million barrels during the week ended Oct. 12, more than the 1 million barrel increase analysts surveyed by Dow Jones Newswires, on average, had expected. But prices reversed course and rose after the Turkish parliament vote. Traders worry that any escalation in the conflict between the Kurds and Turkey will cut oil supplies from northern Iraq. Despite the decision, Turkey's government said an incursion into Iraq isn't imminent.

Many analysts believe speculative investing is the real culprit behind higher prices. Traders see technical signs in the differences between current and future oil contracts that suggest money continues to be plowed into oil futures. And those signals precipitate new buying, which pushes prices even higher. "I think the market has been trading on momentum," said Antoine Halff, head of energy research at Fimat USA LLC.

Despite the nonsense put out by economists at the Federal Reserve and other centers of misinformation, food and energy are the most important components of the consumers' spending basket. And, the wallets of about two billion consumers are being filled by economic growth in China and India. They are spending that money on improving and increasing their consumption of food.

Consumption of all the major grains has increased. In total, global annual consumption of just these four grains increased by 80 million tonnes in five years. Remember, this higher demand must be satisfied by Agri-Food production that is constrained on the supply side. Agri-Food production is not like a factory. We can not just turn a dial and increase production.

The ability of the globe to produce Agri-Foods is constrained by the total amount of productive farm land. In the past five years the United States, for example, lost 10 million acres of farm land. Europe has moved to eliminate any farm land set aside, and will be planting essentially all available farm land in the next year.

Higher demand up against constrained supply means higher prices. Higher food prices are inevitable!

Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. "These numbers are absolutely stunning," said Marc Ostwald, an economist at Insinger de Beaufort. Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said. The release comes a day after the IMF warned that the dollar was still overvalued and likely to face "some depreciation in the medium term".

The US requires $70bn a month in capital inflows to cover its current account deficit, but the key sources of finance are drying up one by one. BNP Paribas said America has relied on "hot money" from abroad to cover 25pc to 30pc of the US short-term credit and commercial paper market over the last two years.

This flow is now in danger after the seizure in parts of the market over the summer and after the Federal Reserve's half point rate cut, which has shaved the US yield advantage over other countries. Ian Stannard, a Paribas currency analyst, said the data was "extremely negative" for the dollar. "It exceeds the worst fears. It is not just foreigners who are selling US assets. Americans are turning their back as well," he said.

Central banks in Singapore, Korea, Taiwan, and Vietnam have all begun to cut purchases of US bonds, or signalled an intent to do so. In effect, they are giving up trying to hold down their currencies because the policy is starting to set off inflation. The Treasury data would have been even worse if it had not been for $60bn of inflows from hedge funds based in Britain and the Caymans, which needed to cover US positions at the height of the credit crunch.

Sir Christopher Ondaatje feared his warning of economic meltdown would come too late. So he wrote faster and faster, PREDICTING THAT THE PRESENT ABUSE OF MONEY IN THE FINANCIAL WORLD COULD CAUSE THE WORLD ECONOMY TO COLLAPSE, CREATING CHAOS AND CONFUSION ACROSS THE GLOBE, FROM AMERICA TO CHINA.

He foretold that the American housing bubble, based on reckless mortgage lending, would burst, with repercussions for us all. While *"The Power of Paper" was at the printers, it did. Then, another warning tremor: people started queuing to get their money out of Northern Rock branches across Britain.

"The Government says it will back Northern Rock," he says scornfully. "They don't have the money. They are desperate to get someone to buy it and get it off their back." These are dangerous times. And, make no mistake about it, Northern Rock is only the tip of the iceberg. Recent government action [to guarantee investors' deposits] may indicate that this is the end of a seriously bad beginning, BUT IT MAY BE A WARNING THAT THIS IS THE BEGINNING OF THE END!"

He lists the problems: -
THE PERILS OF DERIVATIVES,
THE SNARE OF SUB-PRIME MORTGAGES,
THE QUESTIONABLE PRACTICE OF DISGUISING AND REPACKAGING DEBT
AND THE AWFUL LACK OF TRANSPARENCY ABOUT WHAT IS REALLY GOING ON.

His final prediction is that the purchasing power of the dollar and the pound will be only 10 per cent of what it is now in 10 years' time - maybe five.

* 'The Power of Paper' by Christopher Ondaatje (HarperCollins)

The Syrian envoy disclosed the nature of the target during a meeting of a UN committee where Israeli envoys were also present. A senior source in the Foreign Ministry confirmed that the statement was made in New York by the Syrian official.

Since first announcing on September 6 that an incursion into Syrian airspace by IAF jets took place, Syria has attempted to strike a balance between mustering international condemnation of Israel on the one hand and efforts by Damascus to blur the nature and purpose of the facility attacked on the other hand.

Israel continues to keep mum on the affair, and the only information cleared by the military censor for publication was the fact that a strike took place; any other information published in Israel continues to be accompanied by the phrase "according to foreign media outlets."

Israeli analysts estimated that the government's decision not to disclose information about the strike was intended to avoid embarrassing Assad's regime, in the hope that silence on Israel's side could prevent the tension between the two countries from escalating into all-out war.

The microbe, a strain of a once innocuous staph bacterium that has become invulnerable to first-line antibiotics, is responsible for more than 94,000 serious infections and nearly 19,000 deaths each year, the Centers for Disease Control and Prevention calculated.

Although mounting evidence shows that the infection is becoming more common, the estimate published today in the Journal of the American Medical Association is the first national assessment of the toll from the insidious pathogen, officials said. "This is a significant public health problem. We should be very worried," said Scott K. Fridkin, a medical epidemiologist at the CDC.

MRSA is a strain of the ubiquitous bacterium that usually causes staph infections that are easily treated with common, or first-line, antibiotics in the penicillin family, such as methicillin and amoxicillin. Resistant strains of the organism, however, have been increasingly turning up in hospitals and in small outbreaks outside of heath-care settings, such as among athletes, prison inmates and children.

In the second paper, Michael E. Pichichero and Janet R. Casey of the University of Rochester in New York documented the emergence of an antibiotic-resistant strain of another bacterium known as Streptococcus pneumoniae, which causes common ear infections. Although all 11 children identified in the Rochester area with the microbe so far were successfully treated, five required an antibiotic approved only for adults, and one child was left with permanent hearing loss.

The researchers attributed the emergence of the strain to a combination of the overuse of antibiotics and the introduction of a vaccine that protects against the infection. "The use of the vaccine created an ecological vacuum, and that combined with excessive use of antibiotics to create this new superbug," Pichichero said.

The MRSA estimate is being published with a report that a strain of another bacterium, which causes ear infections in children, has become impervious to every approved antibiotic for youngsters. "Taken together, what these two papers show is that we're increasingly facing antibiotic-resistant forms of these very common organisms," Bancroft said.

Traders are concerned that a Turkish incursion into Iraq in search of Kurdish rebels could disrupt crude supplies from northern Iraq.

"Whenever there is any escalation in political tensions in the Middle East, oil markets become concerned," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney. "There is production and there are pipelines that people worry may be affected if there are any issues in Iraq."

Adam Applegarth, Northern Rock's chief executive, told MPs that the revelation that his bank had been forced to seek emergency financial support from the Bank of England had helped cause the wave of panic withdrawals that may have seen as much as £7 billion pulled out of its accounts.

And Matt Ridley, the bank's chairman, said that without the media exposing Northern Rock's troubles, the run on the bank could have been averted. The bank's troubles ultimately stem from a global shortage of credit. But its efforts to keep its plight a secret were shattered on the night of Thursday, 13 September when the BBC revealed that Northern Rock had asked the Bank of England for an emergency line of credit.

The following morning, queues started to form outside Northern Rock branches as savers rushed to withdraw money. The panic eventually forced the Treasury to issue an unprecedented public promise to underwrite all money deposited with the bank, a promise that could be worth more than £20 billion.

Mr Applegarth, testifying before MPs on the Treasury select committee yesterday, made clear he considered the BBC report to have contributed to his bank's near-demise. "It caused us immense difficulties," he said.
During a stormy interrogation yesterday, it emerged that both Mr Applegarth and Dr Ridley have offered their resignations to the Northern Rock board, but had their offers turned down. Yet members of the cross-party committee yesterday left no doubt that they believe that the positions of both men are still extremely fragile.

Michael Fallon, the senior Tory MP on the committee, turned his fire on Dr Ridley. He said: "You are the chairman of the bank that ran out of money, that caused the first bank run in this country for 150 years. You have had to borrow billions of public money from the Bank of England. You have damaged the good name of British banking. Why are you still clinging to office?"

Dr Ridley, a former journalist and scientific author, replied that he was working "night and day" to repair the damage done to Northern Rock.