WASHINGTON - A SUMMIT of world leaders on the global financial crisis will be held in Washington next month, the White House announced on Wednesday, amid warnings that widespread recession is now inevitable.

With the sense of turmoil highlighted by wild swings on the currency markets, further government steps were taken to try and restore confidence.

But stock markets experienced more steep falls, with the Dow Jones Industrial Average dropping more than 300 points in early trade.

After being urged at weekend talks with French President Nicolas Sarkozy to hold a summit to review the whole global financial architecture, US President George's Bush office said the heads of 20 rich and emerging countries would gather here on November 15.

'The president today is going to invite the leaders of a group of 20 countries... to discuss the financial markets and the global economy,' White House spokeswoman Dana Perino told reporters.

'The leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes and in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world's financial sectors.'

The announcement came as one of Mr Bush's closest allies, British Prime Minister Gordon Brown, acknowledged his country was 'likely' entering recession.

'Having taken action on the banking system, we must now take action on the global financial recession, which is likely to cause recession in... Britain, too,' Mr Brown said during his weekly questioning session in parliament.

Crucial data is expected to show on Friday that the British economy shrank in the third quarter after zero growth in the second. The technical definition of a recession is two straight quarters of negative economic growth.

A similarly gloomy assessment came in a forecast from the Swiss bank UBS which said Europe faced 'inevitable' recession which would begin 'almost in synch with the US'.

Mr Brown's remarks come a day after Bank of England Governor Mervyn King said the credit crunch and high inflation were combining to pose 'the risk of a sharp and prolonged slowdown in domestic demand.'

Speaking to a meeting of business leaders in northern England, Mr King said it was 'difficult to exaggerate the severity and importance of those events'.

The prospect of a sharp economic slowdown has raised expectations that the British central bank will again cut interest rates, making sterling a less attractive investment than the euro or the dollar.

The British pound plunged to a five-year trough but the euro also took a pummelling, falling to its lowest level for almost two years against the dollar, amid similar rates cut expectations.

There were also more signs of trouble in the emerging markets, with South Africa's rand falling to a six-year low against the dollar.

After Hungary's forint currency fell to a near two-year low point against the euro, the central bank in Budapest moved to stop further plunges by hiking up its key interest rate by three points.

On the stock markets, Japan's Nikkei share index closed down 6.79 per cent while Europe's major markets were all down.

In late afternoon European trade on Wednesday, the London stock market was down 4.10 per cent, Paris lost 5.22 percent and Frankfurt fell 4.27 per cent.

The turbulence on the stock and currency markets came despite new attempts by the US Federal Reserve to restore confidence to the fragile financial system.

In its latest move, the Fed said it had increased the interest rate it pays on reserves deposited with it by banks.

The rate for reserves had previously been the Fed's main target rate minus 75 basis points. The new rate will be the target rate minus 35 basis points, the Fed said.

The US last month unveiled a US$700 billion (S$1 trillion) bailout package for its banks while European governments have also guaranteed inter-bank loans worth more than a billion dollars to stimulate lending. -- AFP