NEW YORK: US Federal Reserve chairman Ben Bernanke yesterday warned that credit market turmoil posed a "significant threat" to an already slowing American economy as new data deepened recession fears, sending stocks tumbling.

European leaders meeting in Brussels called for a new world financial order to prevent future crises. Britain and Germany joined France in calling for an international summit this year to draw up a new world financial system.

The US reported its biggest monthly decline in retail sales in more than three years and Europe offered negative economic data and outlooks of its own.

"By restricting flows of credit to households, businesses, and state and local governments, the turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," Bernanke said.

World shares tumbled and oil fell more than $3.

British unemployment rose to 5.7pc, its highest level in eight years, data showed..

Southeast Asian nations, backed by $10 billion from the World Bank, were the latest to join the rescue effort, agreeing to create a multibillion fund to help banks.

Iceland, driven close to bankruptcy as frozen credit markets caused its banks to fail, cut interest rates a staggering 3.5 percentage points as its officials pursued efforts to get help from Russia via a multibillion-euro loan.