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Financial markets need to be more tightly regulated to preclude financial crises and reduce perceptions that some firms are too big to fail and will be saved by the government, central bankers and economists suggested at the Federal Reserve's policy conference.

Major changes are probably years away. In the meantime, as Fed Chairman Ben Bernanke noted, businesses and consumers are feeling the impact of the current financial crunch as economic growth softens and unemployment rises. The Treasury Department faces a possible bailout of mortgage giants Fannie Mae and Freddie Mac, and the Fed is continuing emergency lending to strapped banks.

Policymakers tried to do several things at the conference, which focused on financial stability. One was to get a better understanding of the specific factors that caused credit markets worldwide to seize up a year ago as the U.S. housing market, and mortgage-backed bonds, started to sour.

In an extraordinary affect, the Office of the Comptroller of the Currency asked federal regulators to scale back a proposal to crack down on unreal credit card practices.

The proposal would ban credit card issuers from raising interest rates on existing balances, except in certain circumstances, such as when a promotional rate expires. It would require banks applying as well at least part of any payment to higher rate balances and clamp down on fees charged to consumers with blemished credit.

The proposal has drawn more than 61,000 comments, most of them from consumers with credit card complaints. The Fed has received more than 2,000 consumer comments on a separate, but related, proposal to clarify credit card terms, Chairman Ben Bernanke said: "improved disclosures alone cannot solve all of the problems consumers face in trying to manage their card balances."

Sales climbed to a seasonally adjusted annual rate of five million units, announced the National Association of Realtors.

The figures were greater than expected, but home sales were still 13.2% less than the level last year. Many parts of the United States worst hit by the US sub-prime crisis have seen prices slump, sending average prices lower.

The home's median price sold in July fell 7.1% year-on-year to $212,000.

"The small rise in monthly home sales is a reflection of increased sales of foreclosed homes at low prices, rather than a pick-up in the regular private sales market," said economist Ian Shepherdson. "But they all count" he added.

However despite the increase in home sales, the number of unsold homes for sale was much higher. Unsold single-family homes increased to 4.67 million, matching the record set in April this year.

Japan's central bank chief says yesterday: economy will remain under pressure, but it won't be as severe as the downturn more than 10 years ago.

The chief of the Central Bank of Japan said on Wednesday that he expects the world's second largest economy staying stagnant for the time being and denied it was headed toward the sort of deep fall that crippled the country in the 90s.

While Japan is hurting under the pressure of volatile financial markets and escalating prices, the economy is springing back to life once external factors stabilize, Masaaki Shirakawa said.

He said the economy was in better shape now than in the past, when Japan faced excess capacity and labor.

The pound has hit its lowest level against the USD in more than two years, increasing recent losses on fears about the health of the United Kingdom economy.

Sterling dropped as low as $1.8405 - its lowest price since July 2006 - before recovering to $1.8542 by mid-afternoon in Europe.

The GBP has fallen sharply this month. As recently as mid-July, one sterling bought two USD.

The sterling's losses gathered pace on Friday due to fresh recession fears.

The EUR also fell against the USD, trading at $1.4708 but above a six-month low of $1.4630 hit some days ago.