New Zealand and Sweden cut interest rates yesterday in response to the financial crisis and weak Japanese exports added to fears of global recession.

Investor flight from emerging economies, a number of which looked set to seek help from the International Monetary Fund, compounded market nerves.

Sweden, which joined the US Federal Reserve and others in a coordinated round of cuts two weeks ago, lowered its key interest rate by 50 basis points and signalled more to come.

New Zealand cut rates by a record one percentage point and also said more reductions were in the pipeline.

"The interest rate cuts are aimed at alleviating the effects of the financial crisis on the real economy," Sweden's Riksbank said in a statement.

Japanese exports grew only 1.5 per cent last year from a year earlier, well short of forecasts, prompting worries that the world's second-biggest economy is heading into recession and renewing speculation of a Bank of Japan rate cut.

A dive in car shipments to the US and slowing demand from emerging economies hurt Japanese exports. Italy's Fiat and South Korea's Hyundai Motor Co. added to the gloom surrounding automakers with bleak forecasts for next year. "Clearly, in spite of the fact that the global banking system was saved by government recapitalisation and guarantees, crisis in the real economy is still deepening and will have to play out in several quarters of negative growth," Dariusz Kowalczyk with CFC Seymour in Hong Kong said in a research note.

Authorities around the world have committed nearly €2 trillion in a variety of schemes including deposit and debt guarantees and taking stakes in struggling banks, to restore confidence to the financial system.

A raft of US companies - including Microsoft and Coca-Cola - will report results later yesterday.

The crisis is increasingly affecting developing economies.

The cost of insuring Russian debt hit a record high yesterday, despite Russia's large foreign currency reserves, a sign that investors are increasingly reluctant to leave their money in once buoyant emerging markets.