BEN BERNANKE

The dollar rose against the euro, but fell against the yen on Monday, as investors attempted to minimize exposure to risky assets amid lingering fears of a global credit crisis.

Investors weighed up on Wednesday the prospects of a near-term U.S. rate cut to calm a financial storm stemming from America's faltering home loan sector, as the European Central Bank moved to soothe money markets again. Indicating liquidity problems were far from over, the ECB said it would hold a tender to add 40 billion euros in 91-day funds to the euro money market on Thursday -- a technical measure aimed at supporting the normalisation of the market.

Shares rose on Wednesday as hopes grew of a U.S. interest rate cut to calm turbulent markets but an increase in risk appetite sent bonds lower and put the yen under pressure.

The yen fell and high-yielding currencies rose on Wednesday as growing expectations of a U.S. rate cut to ease tight liquidity conditions instilled a sense of calm and prompted investors to reenter risky carry trades.

Investors sought to gauge on Wednesday the prospects of a near-term U.S. rate cut to calm a financial storm stemming from America's faltering home loan market, as some experts said the world economy would take a hit.

Most Asian stocks tiptoed higher in early trade on Wednesday, lifted by hopes that the U.S. might cut interest rates to calm turbulent markets, but the stronger yen weighed on Japan's exporters, such as Toyota Motor.

The S&P 500 and Nasdaq rose on Tuesday as a signal that the Federal Reserve might cut its benchmark interest rate soon muted persistent concerns about withering credit markets.

Federal Reserve Chairman Ben Bernanke signaled a willingness to consider an early cut in the benchmark interest rate to quell market unrest, a key U.S. lawmaker said on Tuesday after meeting with the Fed chief, sending Wall Street higher.

U.S. stocks rose to session highs on Tuesday after a U.S. lawmaker said the Federal Reserve chairman pledged to use all available tools to calm financial markets, increasing speculation about a rate cut. U.S. crude oil futures fell below $70 a barrel, pushing up airline stocks like the parent of American Airlines, AMR Corp., up nearly 7 percent at $23.73. It was the first time oil has fallen below $70 since July 2.

The yen gained broadly in volatile trading on Tuesday as persistent jitters about global credit conditions prodded investors to sell more risky assets funded by borrowing at low rates in the Japanese currency.

Senate Finance Committee Chairman Christopher Dodd on Tuesday said he asked the Bush administration to lift the portfolio caps on housing finance giants Fannie Mae and Freddie Mac, but Treasury Secretary Henry Paulson expressed reluctance to do so.

Finance chiefs from the world's three biggest economies sought on Tuesday to keep a lid on global market jitters as banks at the sharp end of a global financial storm said they faced serious trouble. Japanese Finance Minister Koji Omi and U.S. Treasury Secretary Henry Paulson agreed to keep a close eye on markets while German Finance Minister Peer Steinbrueck said there was no sign of the turmoil hitting the wider economy.

Stocks fell on Monday, led by losses in financial companies, as worries about spillover from the subprime mortgage market lingered despite the Federal Reserve's surprise discount rate cut on Friday.

Stock index futures were little changed on Tuesday before data on inflation that could shed light on the Federal Reserve's next move in dealing with a deteriorating credit environment.

For investors, the subprime crisis is the first real test of will since the Internet stock bust six years ago.

Central banks around the globe pumped billions of dollars into banking systems on Friday in a concerted effort to beat back a widening credit crisis, and pledged to do more if needed. n all, central banks in Europe, Asia and North America have pumped out more than $300 billion over 48 hours in an effort to keep money flowing through the arteries of the global financial system, hoping to prevent a credit market seizure that could imperil economies.

Major central banks swept in to calm credit markets spooked by mounting losses on Thursday, with the European Central Bank injecting record amounts of cash to prevent the financial system from seizing up.

In just eight words, the Federal Reserve waded deeper into a touchy debate over whether consumer spending can stand up to a housing market downturn.

The U.S. Federal Reserve is expected to hold overnight interest rates steady and reaffirm concerns about inflation at its meeting on Tuesday, but may also acknowledge emerging signs of economic weakness. Fed policy makers began meeting this morning against a backdrop of unsettled financial markets and are expected to announce their decision on interest rates at 2:15 EDT.

U.S. Federal Reserve officials meeting on Tuesday will grapple with how turmoil in financial markets and tighter credit may damage the economy, and could hint at some concern growth could falter.

Gold climbed to a new 10-week high on Friday on follow-through buying, supported by a weaker dollar that hovered near a record low against the euro.