World stock markets remain in a state of turmoil despite an emergency intervention by the US Federal Reserve to stop that country's slide into a recession.

The bank slashed rates in the biggest cut in 25 years in the face of worsening employment and housing conditions.

Members of the bank took the decision over a telephone conference call.

Despite the unscheduled reduction stocks in New York are down tonight and markets are expected to get off to a nervous start in Australia and Asia.

Earlier Taoiseach Bertie Ahern expressed confidence that the Irish economy can weather the current economic storm if it sticks to existing economic policies.

Speaking to journalists in Dublin, Mr Ahern said the volatility in the stock markets was not helpful but the impact should not be exaggerated.

Fine Gael has accused the Government of failing to insulate the economy against the current turbulence in the stock markets.

Deputy leader and Finance spokesperson Richard Bruton said there was no strategy to cope with the present situation, and that the Government's failure to ensure competitiveness had left Ireland exposed.

Impact on Europe

Eurozone finance ministers have called for calm in the face of the current turmoil on international stock markets.

The 15 ministers met in Brussels last night with the current market volatility weighing heavily on them.

Luxembourg's Prime Minister Jean-Claude Juncker, who chairs the Eurogroup, said it was important not to overreact to the current market turmoil, caused primarily by the US subprime mortgage crisis.

Nevertheless, after months of downplaying the prospects of a recession in the US, Eurozone finance ministers now say they cannot rule out the possibility of the US going into a recession this year.

Such a recession would impact on Europe, and they have trimmed their growth forecast from 2% to 1.8% for the Eurozone.

But EU economics commissioner Joaquín Almunia says a US recession would not have such a severe impact on Europe as previous recessions, as the two economies have become less linked.

The Eurozone exports more to Britain than the US.

Mr Juncker also said the European Central Bank was right to target inflation with its interest rate policy, despite criticism from France that euro interest rates were making the economy less competitive, and should be cut.