Wall Street titans buckled under the weight of a global stock market panic yesterday as the finance chiefs of the world's major economies gathered in Washington to confront the inescapable financial crisis.

US stocks roared back in the final hour of trade with the Dow trimming losses to 1.5 per cent on a day in which it traded in a 1,000-point range.

The eighth straight day of losses left the Dow down 18 per cent for the week.

The late-session comeback was welcome relief after a white-knuckle ride that saw trillions of dollars of wealth erased in a week and nose-diving share prices suspended trade on bourses around the world.

The rally only partially resurrected the shares of Morgan Stanley and Goldman Sachs, pummelled when credit rating agency Moody's Investors Service said it might cut their ratings, reviving concerns about the viability of their banking models.

"We're kind of rallying late here on speculation about what the G7 will do over the weekend," John O'Brien, senior vice president at MKM Partners LLC in Cleveland, Ohio, said before the closing bell.

Chaos awaited finance ministers and central bankers from the Group of Seven major industrialized nations as they gathered in Washington to contemplate a next step after concerted interest-rate cuts, individual liquidity injections, a $700 billion US bailout and government plans to take equity stakes in banks failed to restore investor confidence.

They pledged a coordinated response but stopped short of backing a British plan to guarantee lending between banks.

Many investors, leading nations and the International Monetary Fund all clamoured for a united front.

They would consider remaining options to confront the frozen credit markets underlying the worst financial crisis since the Great Depression.

A Treasury Department spokesman said Washington was reviewing British Prime Minister Gordon Brown's proposal that other governments follow Britain in putting money into struggling banks and offering multibillion-dollar guarantees to persuade them to start lending to each other.

G7 officials were discussing common principles on bank rescues and whether a joint statement should declare that no bank of systemic importance would be allowed to fail.

"This is a systemic crisis and we need a systemic way to handle it. The G7 needs to find an unified approach to handle the crisis. Banks need to be recapitalised," Canadian Finance Minister Jim Flaherty told reporters.

In one glimmer of hope, there were signs of the start of a thaw in the credit markets. Interest rates on US overnight commercial paper dropped after overnight dollar and euro rates fell closer to central banks' new lower targets.

Consumers also stood to benefit from lower oil and commodities prices.

US benchmark crude fell almost 10 per cent to around $78 per barrel, while US corn and soy futures fell about seven per cent each.

Many investors have been looking for global leadership, but US President George W. Bush is a lame duck ahead of the November 4 presidential election. Democratic nominee Barack Obama said the crisis required coordinated international action and Republican John McCain argued his experience made him the candidate who can lead Americans through a time of economic tumult.

One strategist said he feared a political vacuum with weak governments in Europe and North America.

"It's not like we have a Franklin Roosevelt and a Churchill," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.