British Airways' widening pension deficit could become a stumbling block in its merger talks with Iberia , as the Spanish airline's shareholders use it to gain a bigger stake in the new group.

The Armor Holdings unit of BAE Systems has agreed to pay $30 million (17.1 million pounds) to resolve charges that it knowingly made and sold defective bullet-proof vests used by U.S. police and emergency workers, the Justice Department said on Tuesday.

Spain will boost its guarantee for deposits in its banks to 100,000 euros and create a 30 billion euro (23.3 billion pound) fund to support the financial system and keep credit flowing to the economy, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

Countries scrambled to slow the growing global financial crisis on Tuesday and Wall Street braced for the day after a massive sell-off, nervous about corporate earnings and hoping Fed Chairman Ben Bernanke might offer a ray of hope.

European stocks drifted lower on Tuesday as mounting concerns about the health of the financial sector hit banks, with shares in Royal Bank of Scotland and HBOS plunging nearly 40 percent.

Prime Minister Gordon Brown and his chancellor, Alistair Darling, will hold talks on the financial crisis with the governor of the Bank of England, Mervyn King, later on Tuesday, a spokesman said.

Shares in Royal Bank of Scotland slumped 41 percent in late trading on Tuesday to their lowest level since late 1993 amid concerns over funding needs for the banking sector.

Prime Minister Gordon Brown and Chancellor Alistair Darling will meet the heads of the Bank of England and Financial Services Authority on Tuesday for talks on stabilising the banking system.

The U.S. Federal Reserve on Tuesday announced it would create a special-purpose facility, with the Treasury Department's blessing, to begin buying commercial paper in yet another emergency move aimed at calming chaotic financial markets.

Barclays Capital said Tuesday it fully integrated Lehman Brothers' U.S. foreign exchange and commodities businesses under the Barclays Capital name.

BT Group chief executive Ian Livingston said on Tuesday the group has not been affected "yet" by the global financial crisis and has no need to go to the bond markets in the coming 12 months.

Bhs Group, the department store chain owned by billionaire Philip Green, posted a 40 percent fall in full-year operating profit on Tuesday, and for the fourth year running Green decided not to take a dividend.

Recruiter Michael Page reported increased third-quarter profit on Tuesday but warned that the UK and U.S. job markets were slowing and the rest of the year would be challenging, sending its shares lower.

A panel of European Union lawmakers adopted an overhaul of the bloc's 7 trillion euro (5.4 trillion pound) insurance sector on Tuesday but diluted measures to streamline how the big insurers are supervised.

Britain's top share index crept back from a four-year low set earlier in the session by midday on Tuesday, as gains in energy stocks outweighed heavy losses in the ailing banking sector in volatile trade.

Power prices continued their ascent on Tuesday on worries over tight margins next month, while gas prices fell as increased winter supply has kept the system long.

Demand for designer clothes in larger sizes is helping home shopping firm N Brown to defy a downturn in consumer spending, it said on Tuesday, as it beat first-half profit forecasts.

Oil rose by $2 a barrel on Tuesday after a large interest rate cut in Australia aroused hopes that other policymakers would follow suit to bolster economic growth, a move that would support oil demand.

The government will discuss the structure of a possible bank recapitalisation scheme with the country's lenders over the next few days, having held initial talks on the matter on Monday night, an industry source said.

The government held talks with major banks on Monday evening at which the possibility of an injection of public money was discussed, according to a source familiar with the talks.

An injection of capital by the government into British banks was one of the options discussed between the Treasury and banking industry officials at a meeting on Monday evening, a source familiar with the talks said.

Directories firm Yell has successfully renegotiated its covenant terms with lenders to give 20 percent headroom above forecasts, it said on Tuesday, sending its shares soaring.

The leading share index recorded its biggest ever one-day points fall on Monday with banking and commodity stocks taking a battering as the fallout from financial crisis once again overwhelmed global markets.

World stocks fell again on Tuesday and sterling hit a 2-1/2 year low after talk of government funding hit UK banks, erasing gains in the benchmark index made after Australia's surprisingly large interest rate cut.

Recruiter Michael Page , which recently rejected a bid approach from rival Adecco , reported a 14.6 percent increase in third quarter profit on Tuesday but warned the job market was slowing.

Confidence among firms fell to its lowest on record in the third quarter as sales and orders tumbled, a survey from the British Chamber of Commerce said on Tuesday.

Investors looked to central banks and politicians on Tuesday to show they could contain an escalating financial crisis after Australia responded by cutting interest rates sharply.

Australia's central bank stunned investors with its biggest interest rate cut in 16 years on Tuesday, lifting Asian markets on speculation other central banks would follow suit in a possibly coordinated move to combat the global credit crisis.

Royal Caribbean Cruises Ltd said it has agreed to sell its 50 percent stake in Island Cruises to a unit of tour operator TUI Travel , which owns the other half.

What if there were a run on a bank and no one knew?

Shareholders in financial group Fortis will be able to claim a part of any profit the Belgian state makes from its investment in Fortis Bank Belgium and in BNP Paribas , the government said on Tuesday.

Anheuser-Busch Cos Inc investors on Nov 12 will cast their votes on its planned merger with InBev NV , according to a filing with the U.S. Securities and Exchange Commission on Monday.

The government promised on Monday to protect ordinary savers in the face of global financial turmoil, but shares in the country's banks fell sharply on fears the government would seek partial ownership in return for support.

European governments struggled on Monday to shelter banks and bank depositors from a global financial crisis that is eroding confidence, endangering the economy and challenging their ability to respond as one.

The financing package offered by Reed Elsevier in the sale of its trade publication unit might come in smaller than expected, causing bidders to re-examine their offers, a source familiar with the matter said on Monday.

Renown Inc plans to sell its stake in British clothier Aquascutum by February 2009 as part of a restructuring, according to a report by Nikkei Business News.

Small Bradford & Bingley shareholders fear that like investors in Northern Rock they stand to lose everything after the government bailed out the bank with a mixture of nationalisation and asset disposals.

Credit ratings agency S&P cut its rating on Royal Bank of Scotland on Monday, citing earnings and further writedown risks, just as its shares tumbled 20 percent as Europe's banks were hit by deepening gloom.

The German and Italian leaders on Monday backed a potential agreement between Alitalia and Lufthansa on the German airline taking a minority stake in the Italian carrier.

Italian prosecutors sought a 13-year prison term for the former head of Italian food company Parmalat SpA Monday over its 2003 collapse in one of Europe's biggest financial scandals.

Coface, a credit insurer, confirmed on Monday it had withdrawn cover to suppliers of JJB Sports , dealing a fresh blow to the sporting goods retailer.

Gold prices rose nearly 5 percent on Monday, leading other precious metals higher, as a slide in stock markets sparked a flight to safety.

British Airways shareholders are likely to receive around 60 percent and Iberia investors 40 percent of a new airline when they merge, Iberia's biggest shareholder, Caja Madrid, said on Monday.

Japan's Nomura Holdings Inc is hiring more than 150 former Lehman Brothers' staff to expand its European fixed income division days after refusing to take on the fallen investment bank's debt unit in Europe.

BNP Paribas agreed to scoop up assets in Belgium and Luxembourg of banking and insurance group Fortis for 14.5 billion euros (11.2 billion pounds) to become the euro zone's biggest deposit bank.

A senior official of the Financial Services Authority said he saw little evidence of the need for the European Commission's proposed rule that banks must retain a percentage of the asset-backed securities they sell.

Coface, a credit insurer, confirmed on Monday it had withdrawn cover to suppliers of JJB Sports , dealing a fresh blow to the sporting goods retailer.

Eli Lilly and Co has agreed to acquire ImClone Systems Inc for $6.5 billion (3.7 billion pounds), potentially bringing to a close one of the most colourful corporate sagas in biotech history.

(Corrects paragraph 3 to say that Aviva's exposure to Lehman Brothers accounted for less than 0.1 percent, notless than 1 percent. La Tribune had cited the "Less than 1 percent " figure in an interview, which was rectified by an Aviva spokeswoman.) Britain's largest insurer Aviva will stay away from acquisitions this year as it waits for more visibility on financial markets, its chief executive

Gold prices rose nearly 5 percent on Monday, leading other precious metals higher, as a slide in stock markets sparked a flight to safety.

Gold climbed more than 4 percent on Monday as weakness in global equity markets fuelled interest in bullion as a haven from risk.

Low-cost airline easyJet followed arch-rival Ryanair by reporting a 20 percent rise in September passenger volumes, but shares fell across the sector amid growing concerns about the economy.

The U.S. Federal Reserve is brokering discussions between Wells Fargo & Co and Citigroup over which of the banks will buy Wachovia's assets, people familiar with the matter said on Sunday.

The country's largest insurer Aviva will stay away from acquisitions this year as it waits for more visibility on financial markets, its chief executive said in a newspaper interview.

ImClone Systems has agreed to be acquired by Eli Lilly for about $6.1 billion (3.5 billion pounds) after rebuffing a sweetened takeover offer from Bristol-Myers Squibb , sources familiar with the situation said on Monday.

The government will not put pressure on the Bank of England to cut interest rates but is prepared to take big steps with economic policy to stem the credit crisis, Chancellor Alistair Darling said on Sunday.