Central banks try new methods amid market mayhem

Central banks across Asia stepped up to offer more support to commercial banks on Wednesday, to try to ease painful pressure on funding costs from a vicious global credit squeeze.

Just a day after it slashed interest rates by the most in 16 years, Australia's central bank expanded the types of collateral it would take for loans to banks and greatly lengthened the period for which it would lend.

The Bank of Japan leant a further $20 billion to a dollar-hungry market and Hong Kong chopped the borrowing rate it charged banks by a full percentage point. There were also reports China might soon cut its interest rates.

The Federal Reserve took the radical step of lending to companies directly and signaled a new readiness to ease U.S. interest rates.

And the UK government was expected to announce a 50 billion pound bailout of its banking system on Wednesday, after shares at some institutions feel up to 39 percent the day before.

Yet, all this furious activity could not prevent share markets across Asia from slumping as worries grew that nothing the central banks could do would head off a global recession.

"Governments around the globe are very active and aggressive in providing liquidity to markets but it's not going to fix the problem we have right now which is high interbank lending rates," said Craig Saalmann, a credit strategist at JPMorgan in Sydney.

"It is a market solution that is going to sort this out, not a government or central bank intervention," he argued.