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Investors who have lost faith in the banking system are turning to property as a safe haven for their cash. Estate agents have identified a growth in interest from cash buyers, who want something tangible for their money rather than depositing it with banks they no longer trust. The trend is emerging in all corners of the property market, according to one nationwide agent, from high-end mews houses in Knightsbridge to dilapidated two-up two-downs in the East Midlands.

HSBC raised the stakes surrounding the Government's £500 billion banks recapitalisation programme yesterday by announcing that it had injected £750 million into its UK business. HSBC's speedy compliance with the Government's demand on Wednesday that all banks bolster their Tier 1 capital - a measure of financial strength - heightens the pressure on its rivals to respond. HSBC said that it had funded the injection, which represents 1 per cent of the group's shareholder equity, from internal resources. Most of the bank's rivals are likely to have to raise additional capital to meet the Government's demand.

Central banks in Asia yesterday joined their western counterparts and cut interest rates in an attempt to ward off the global financial turmoil threatening to stall the region's decade-long economic boom. The rate cuts in South Korea, Hong Kong and Taiwan, which helped Asian equities stage a modest recovery, came a day after China and six central banks including the US Federal Reserve and the European Central Bank also slashed their rates. Hopes that the global action could spur a recovery in the European and US markets quickly faded yesterday as equities came under further pressure and the frozen money markets showed no signs of thawing.

An emergency funding scheme for countries plunged into economic and financial distress by the escalating global credit crisis has been activated by the International Monetary Fund. The use of the emergency facility, for the first time since the Asian crisis of the 1990s, was ordered by Dominique Strauss-Kahn, the managing director of the IMF, and was the latest indication of the mounting fallout from the worldwide financial convulsions. The IMF chief said that the facility could make hundreds of millions of dollars available, if needed, to try to contain damage from the crisis.

The global stock market sell-off turned into a full-blown crash in the US last night, as panicked investors dumped shares on fears that the world is heading into a dangerous recession. The Dow Jones Industrial Average suffered its worst one-day percentage fall since 1987 amid the ongoing instability of the banking system, miserable sales figures from US retailers, and new suggestions that the giant car maker General Motors could go bankrupt. A year to the day after the Dow hit its all-time record, it plunged 679 points 7.3 per cent to 8,579, with some 450 points of the decline coming in a chaotic final hour of trading.

Kaupthing among Britain's 20 largest banks became the third financial institution to be taken over by the Icelandic government this week, after Chancellor Alistair Darling seized its UK operation on Tuesday and ruled out help through the bail-out. Sigurdur Einarsson, the bank's chairman, said the seizure of the UK arm directly led to the collapse of the entire group. "It is very sad, unfortunate and disappointing," he said. Meanwhile a fierce diplomatic row broke out between the UK and Iceland with Prime Minister Gordon Brown accusing Iceland of "completely unacceptable" behaviour by not recompensing UK savers in the failed Icesave bank.

Mortgage giants axed many of their best deals within a day of being handed up to £500billion in taxpayers' cash. The moves make a mockery of the Government's pledge that its rescue package will help hard pressed homeowners. On Wednesday, the Bank of England reduced the base rate by a half point to 4.5 per cent. But some lenders responded to the decision by raising tracker mortgages by the same percentage. That means new customers would miss out on the emergency base rate cut - the first since 2001. A tracker mortgage follows the official base rate up or down, with an additional percentage on top.

House prices are collapsing at their fastest pace since records began 25 years ago - and will keep falling, says a study. The vast majority of those who bought a property after January 2006 paid more than their home is currently worth, with more victims joining the club every day. The report from the Halifax warned that prices have been falling for the last eight months, the longest stretch ever recorded by the bank. It means the meltdown has officially overshadowed the last downturn in the early 1990s. Since September last year, house prices have fallen 13.3 per cent to an average of £172,108, including 1.3 per cent last month.

The Prime Minister said Britain would seize the assets of Icelandic companies and take further action against the authorities over the collapse of the island’s banks. The diplomatic row, which has echoes of the Cod Wars of the 1970s, erupted after it emerged that more than 100 local authorities have deposits in Iceland. They stand to lose a total of more than £1 billion. British companies are said to have as much as £12 billion in the failed banks and individual savers more than £6 billion.

Gordon Brown insisted on Wednesday the government would extract assurances from banks on lending and executive pay as a quid pro quo for state support. But officials admitted there were strict limits on the controls the government could impose on banks' behaviour. On the face of it, ministers are determined to drive a hard bargain. Mr Brown told MPs that any bank seeking taxpayer support would have to "accept new conditions - there are strings attached". They will include controls on executive remuneration, the most politically contentious element of the bail-out.