US shares plummeted again last night as fears that further, frantic efforts by governments to halt financial turmoil will fail to stave off global recession triggered another punishing slump in stock markets.

As panic over the danger of financial and economic meltdown swept Wall Street once more, the latest 7 per cent plunge in the value of America’s blue-chip businesses piled pressure on world financial leaders gathering in Washington today to take yet more drastic measures to avert disaster.

In its seventh consecutive trading session of steep losses, the worst such run since the Black Monday crash in October 1987, the Dow Jones industrial average sank by a further 678.91 points, or 7.33 per cent, to close at a five year low of 8,579.19. The broader-based S&P 500 index of top US companies fell 75.05 points, or 7.62 per cent, to a five-year low of 909.90.

The latest brutal decline in the Dow came on the anniversary of its record high above 14,000, reached a year ago and left it almost 40 per cent below that watershed.

Finance ministers and central bank governors from around the world meet in the US capital today to consider further steps to stem the crisis as the US Treasury is drawing up new plans to shore up American banks with direct cash injections.

Henry Paulson, the US Treasury Secretary, and senior officials sig-nalled that they are actively moving towards taking multibillion-dollar ownership stakes in stricken US banks, mirroring Britain’s £50 billion plan to underpin its banks with direct infusions of capital.

Although the US Treasury proposal for capital injections into banks remains at an early stage, it marks a rapid rethink after Washington’s $700 billion (£409 billion) scheme to buy American banks’ distressed assets, and interest-rate cuts by the Federal Reserve and European central banks and other radical Fed measures failed to end the fear rocking markets.

Mr Paulson made clear late on Wednesday that the rescue law passed by the US Congress, the Troubled Asset Relief Programme, or Tarp, gave him power to inject capital into US banks, as well as buying distressed assets. However, he also cautioned that more institutions could still fail.

“We will use all of the tools we’ve been given for maximum effectiveness, including strengthening the capitalisation of financial institutions of every size,” he said ahead of today’s meetings of finance ministers and central bank governors from the Group of Seven (G7) leading economies.

The prospect of still more aggressive action by US authorities to erect a fire-break to stem the crisis failed to restore any calm, however. In London, shares also tumbled again. The FTSE 100 closed down by another 52.9 points, or 1.2 per cent, at a fresh four-year low of 4,313.8, after Wednesday’s 5.2 per cent slump.

There was little sign of any easing of the near-paralysis strains in money markets. Borrowing costs between banks soared for any period longer than overnight lending, with the three-month dollar Libor rate surging to its highest this year at 4.75 per cent.

Ministers and central bank chiefs from the G7 economies will debate further emergency action to avoid financial ruin today after holding lunchtime talks with President Bush at the White House. Mr Bush summoned the group for discussions to reinforce the search for decisive solutions.

Washington has also called highly unusual emergency talks tomorrow among ministers and officials from the G20 – the Group of Seven big Western economies alongside key emerging market nations. However, senior G7 officials are playing down suggestions that any “grand plan” may emerge.

Edward Lazear, chief economic adviser to the President, said that already planned capital injections should deliver an effective response. He said: “It’s not going to take us a long time to do this. The markets will be reassured in very short order.”

Alistair Darling, the Chancellor, is expected to press G7 colleagues today for a comprehensive approach to taming the financial upheavals, and to call for urgent moves to strengthen international supervision.

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