WASHINGTON - WITH US financial markets still tumbling, the Federal Reserve is signalling that it might cut interest rates after a series of bold steps by federal regulators failed to stem the slide. Oddly, neither presidential candidate offered a solution.

'The outlook for economic growth has worsened,' Fed Chairman Ben Bernanke told a gathering of business economists.

The slumping economy was underscored by a 1,400 point, or 13 per cent, drop in the Dow Jones industrial average during the past five trading days.

After Wall Street's miserable day - with the Dow losing more than 500 points - Asian stock markets fell sharply on Wednesday.

Japan's benchmark Nikkei 225 stock average is now at its lowest level in five years.

The crisis threatening all Americans, and investors round the orld, was only mentioned in passing by the presidential candidates in a debate Tuesday night.

Republican John McCain called for a programme to stem foreclosures by requiring the federal government to renegotiate the mortgages of individual homeowners and make them more affordable.

Democrat Barack Obama claimed the crisis was the 'final verdict on the failed economic policies of the last eight years' that President George W. Bush pursued and were 'supported by Sen McCain,' a charge he has made before.

Earlier, Mr Bush again sought to strike a reassuring tone and said the nation would make it through an economy blighted by job losses, record foreclosures and shriveled retirement savings.

Congress' top budget analyst estimated on Tuesday that Americans' retirement plans have lost as much as US$2 trillion (S$3 trillion), about 20 per cent, in 15 months.

With hundreds of billions of US tax dollars already on the line, Mr Bernanke defended the most aggressive federal intervention in the financial system since the 1930s and said regulators are looking for other innovative ways to try to stabilise markets.

'So long as financial conditions warrant, we will continue to look for ways to reduce funding pressures in key markets,' he told the National Association for Business Economics on Tuesday, also opening the door wider to an interest rate cut on or before the Fed's Oct 28-29 meeting.

The crucial short-term rate under its control, the federal funds rate, is now at 2 per cent. Some market watchers suggest the Fed cut could be as large as a full percentage point.

Besides the US$700 billion financial bailout package Mr Bush signed into law on Friday, the Fed announced two bold programmes.

On Monday, it increased a short-term loan programme to banks and other financial institutions to as much as US$900 billion by the end of the year.

And on Tuesday it said it would buy vast amounts of short-term 'commercial paper' debt, some of it unsecured, and take the Fed into previously uncharted waters.

Stock markets continued their downward spiral as pressure builds for the US government to do even more.

Mr Bush, saying the economic meltdown has brought tough times for many Americans, pledged that 'we're going to come through this.'

'Have faith, this economy is going to recover over time,' Mr Bush said in a speech at an office supply company in a Washington suburb. 'I wish I could snap my fingers and make what happened stop. But that's not the way it works.'

The president earlier reached out to European leaders to urge coordination on efforts to solve the financial crisis spreading around the globe.

The White House said Bush was open to the idea of a world leaders' summit on the economic upheaval.

World finance leaders will be in Washington this week for a meeting of the World Bank and International Monetary Fund. -- AP