Central banks are likely to launch new coordinated emergency action this week to calm the panic sweeping financial markets, which could be rocked further by data pointing to global recession.

The US Federal Reserve is widely expected to cut rates sharply following share selloffs and currency collapses in developed economies and the emerging markets of Asia and Latin America.

Advance third-quarter US economic growth data due on Thursday is expected to show a 0.5 percent contraction in gross domestic product after 2.8 percent growth the previous quarter.

"Increasingly, the signs point to a deep and synchronised global recession," JPMorgan economist Bruce Kasman said.

"It is still too early to accurately gauge the depth of the downturn, as the outlook depends on how well policy actions contain the financial crisis."    

The likelihood of the Fed slashing interest rates by 50 basis point stood at 74 percent on Sunday and at 26 percent for a cut of 75 basis points to 0.75 percent.

Asian and European leaders closed ranks over the weekend to bolster confidence among investors facing the worst financial crisis in 80 years.

"We must use every means to prevent the financial crisis impacting growth of the real economy," Chinese Prime Minister Wen Jiabao said at the end of a two-day summit of 43 Asian and European leaders in Beijing.

China's central bank governor, Zhou Xiaochuan, was on Sunday quoted as saying that Asia's second-largest economy was in good condition but needed to be on guard to fend off risks created by the turmoil.

Investment in infrastructure and expansion of consumer demand could help cushion the impact of weakening exports, he said, adding that the central bank would work out an advance plan to provide emergency help to banks if needed.

Japanese Economics Minister Kaoru Yosano said on Sunday the government should increase its bank bailout scheme to around 10 trillion yen ($106 billion) from two trillion.

South Korea, whose markets and currency tumbled in the global financial storm last week, said it needed to take urgent action to prop up the economy. Some analysts said the central bank would cut interest rates on Monday.

Kuwait's central bank was forced on Sunday to step in to support Gulf Bank, hit by derivatives trading losses, prompting the government to announce it would guarantee deposits at local banks.

Saudi Arabia unveiled plans to deposit 10 billion riyals ($2.67 billion) into the Saudi Credit Bank, established to extend interest-free loans to poor citizens.

Gulf markets tumbled to multi-month lows on Sunday. Both the Qatar and Oman indices fell more than 8 percent, Dubai sank 5.53 percent and Saudi Arabia's index slipped 1.83 percent after an 8.7 percent slide on Saturday.

Officials in Russia said at the weekend its central bank had the means to control sharp fluctuations in its currency, but did not yet see the need to limit capital movements or change the rouble's trading corridor.

Governments have pledged about $4 trillion to support banks and restart money markets to try to stem the crisis and are considering tougher financial rules to guard against any repeat.

Foreign exchange analysts said extreme currency volatility, which included moves of 10 percent on some big rates on Friday alone, could see the Group of Seven or 20 top central banks intervening soon to stabilise world markets.

The US dollar surged to two-year peaks versus a basket of currencies after dismal European economic data reinforced investor fears of a global recession.  The yen soared to multi-year highs versus the dollar and euro on the ensuing risk aversion, while at its low on Friday the British pound suffered its biggest one-day percentage drop against the US currency since 1992.

Market participants will also be preparing for new signs of weakness in cor