Asian markets turbulent ahead of key US meeting

With the US central bank widely expected to cut interest rates further, Asian shares slowed from their dizzying drops a day earlier with Tokyo's Nikkei index down 0.95 percent at noon and Hong Kong up 3.5 percent in morning trade.

Singapore's Straits Times Index, which was closed on Monday for a public holiday, plunged 6.7 percent in early trade while Australian shares were down 1.7 percent.

Markets have plummeted despite the US announcement of a 125-billion-dollar capital injection into nine top banks under its huge bail-out plan, withattention now turning to the two-day Federal Reserve meeting.

The markets took their lead from Wall Street where the Dow Jones Industrial Average closed 2.42 percent down.

The Fed, which led a coordinated global rate cut earlier this month that pushed its target rate down half a point to 1.50 percent, is seen as trimming the rate another 25 to 50 basis points at the meeting starting Tuesday.

European Central Bank president Jean-Claude Trichet also said another cut in interest rates is "possible" next month as fears of a global recession continue to wreak havoc on international markets.

"I consider it possible that the Governing Council would decrease interest rates once again at its next meeting on November 6. It is not a certainty, it is a possibility," Trichet said.

The ECB cut its main lending rate by 0.50 percentage points to 3.75 percent on October 8 as part of rare concerted action by leading central banks around the world to avert a collapse of the banking system and to shore up credit.

British Prime Minister Gordon Brown will meet French President Nicolas Sarkozy on Tuesday ahead of a European Union summit in Brussels on November 7 and a Group of 20 leaders meeting in Washington on November 15.

France currently holds the rotating presidency of the EU, which is battling to agree a united strategy on how to deal with the global credit crunch and economic slowdown.

German Chancellor Angela Merkel is reportedly leading opposition to Sarkozy's proposals, which include creating an "economic government" for the 15-nation eurozone and setting up national sovereign wealth funds.

Gloomy economic news continued with a UN regional body revising down its growth prediction for Latin America and the Caribbean from four to three percent due a drop in investments, remittances and demand for raw materials.

Mexico said it would borrow up to five billion dollars to shore up its finances, partly prompted by sharp drops in the peso, while it has sold off more than 15 billion dollars since October 8 to stop its currency falling.

And Iceland's Prime Minister Geir Haarde said he had asked his fellow Nordic countries for much needed funds at a summit on the crisis that has pushed his nation to the brink of bankruptcy.

Iceland's once booming financial sector has collapsed under the weight of the worldwide credit crunch, forcing the government to take control of the major banks as its currency has nosedived.

The country agreed with the International Monetary Fund last week on a loan of 2.1 billion dollars (1.6 billion euros) but Haarde said Iceland would need about four billion dollars more from various sources.

Britain's central bank meanwhile urged new constraints on banks to avoid a repeat of the financial crisis, saying there needed to be a "fundamental rethink" of how the institutions manage risk.

The Bank of England warned banks had overextended themselves during the economic boom years, lending out more than they were getting in, which helped cause "arguably" the largest episode of instability since World War I.