Central banks around the world have rushed to make currency injections in an effort to reassure financial markets.
The United States Federal Reserve announced a radical plan to buy large amounts of short-term debt in the latest move to jump-start the failing American economy.
The European Central Bank has pumped 37 billion euros into money markets and says it will also lend another $US20 billion to banks for almost three months.
Iceland has nationalised its two biggest banks and is now seeking an emergency bailout from Russia. Moscow has announced an aid package of 950 billion roubles ($US36.4 billion) in long-term help for its banks.
But stocks in the United States plunged again on Tuesday for the fifth consecutive session.
The Dow Jones industrial average sank 508.39 points, or 5.11%, to end at 9,447.11. The FTSEurofirst 300 index of top European shares also ended lower.
European finance ministers agreed in Luxembourg on Tuesday to increase minimum bank deposit guarantees to 50,000 euros ($US67,500 dollars) from 20,000 euros currently.
Russia has negotiated an emergency bailout for Iceland and announced an aid package for its own banks. President Dmitry Medvedev announced an extra 950 billion roubles ($US36.4 billion) of long-term help for banks.
Iceland has asked Russia to extend a 4 billion euro ($US5.4-billion) loan to strengthen the island's currency.
Finance Minister Alexei Kudrin said Moscow viewed the request "positively".
Iceland's banking debts are now several times greater than the entire economy.
Prime Minister Geir Haarde told a news conference on Tuesday that Iceland would not default on its sovereign debt.
Iceland (population 300,000) used emergency powers on Monday to dismiss the board of directors of Landsbanki and put the bank in receivership - sending the currency, the crown, down by 35%, although it later recovered some ground.
Last week the number three bank, Glitnir, had to be rescued.
In the United States, the Federal Reserve announced the creation of a new commercial paper facility that would buy short-term, highly rated debt, funding corporate borrowing for the first time.
The Fed stepped in as a lender of last resort with the US Treasury's blessing, with a programme that is in addition to a $US700 billion bailout that was approved by the US Congress on Friday.
The International Monetary Fund increased its estimate of global losses from the financial meltdown to $US1.4 trillion and warned that the world's economic downturn was deepening.