Unquestionably, the hacking scandal has crossed the Atlantic. The FBI's involvement takes the affair beyond the rumblings of US politicians into the much more dangerous territory of a criminal investigation. Of course, it remains to be proved whether Americans' phones were hacked.

The allegation that 9/11 victims were targeted by the News of the World was made by a rival British newspaper, the Daily Mirror, which based its report on an unnamed source. If evidence of US hacking is uncovered, the scandal will take on a whole new dimension - especially if it touches upon the emotive subject of 9/11.

The company could face a second line of enquiry, into whether payments to British police officers breached US anti-corruption laws.

On one side of the Atlantic, the eurozone debt crisis has spread to the countries that may be too big to save - Spain and Italy - though RBS thinks a 3.5 trillion euros rescue fund would ensure survival of Europe's currency union. On the other side, the recovery has sputtered out and the printing presses are being oiled again. Brinkmanship between Congress and the White House over the US debt ceiling has compelled Moody's to warn of a "very small but rising risk" that the world's paramount power may default within two weeks. "The unthinkable is now thinkable," said Ross Norman, director of thebulliondesk.com.

Fed chair Ben Bernanke confessed to Congress that growth has failed to gain traction. "Deflationary risks might re-emerge, implying a need for additional policy support," he said. The bar to QE3 - yet more bond purchases - is even lower than markets had thought. The new intake of hard-money men on the voting committee has not shifted Fed thinking, despite global anger at dollar debasement under QE2.

Fuelling the blaze, the emerging powers of Asia are almost all running uber-loose monetary policies. Most have negative real interest rates that push citizens out of bank accounts and into gold, or property. China is an arch-inflater. Prices are rising at 6.4 per cent, yet the one-year deposit rate is just 3.5 per cent. India's central bank is far behind the curve.

"It is very scary: the flight to gold is accelerating at a faster and faster speed," said Peter Hambro, chairman of Britain's biggest pure gold listing Petropavlovsk. "One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."

Step by step, the world is edging towards a revived Gold Standard as it becomes clearer that Japan and the West have reached debt saturation. World Bank chief Robert Zoellick said it was time to "consider employing gold as an international reference point." The Swiss parliament is to hold hearings on a parallel "Gold Franc". Utah has recognised gold as legal tender for tax payments.

A new Gold Standard would probably be based on a variant of the 'Bancor' proposed by Keynes in the late 1940s. This was a basket of 30 commodities intended to be less deflationary than pure gold, which had compounded in the Great Depression. The idea was revived by China's central bank chief Zhou Xiaochuan two years ago as a way of curbing the "credit-based" excess.

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people buy gold? "As protection against what we call tail risks: really, really bad outcomes," he replied.

Left-leaning daily Die Tageszeitung writes:

"It's common knowledge that British politicians kowtow to the tabloid press. But that the police were also serving these papers gives the News of the World hacking scandal a new dimension. This isn't about small-time officers locating celebrity mobile phones and betraying the phone numbers of the royal family for reporters at Murdoch's big papers. The country's top police officials suppressed evidence they've had since 2005 and hindered investigations."

"Their excuse - that Rupert Murdoch's company News International (a subsidiary of his News Corporation) was uncooperative - is a declaration of bankruptcy. Of course those guilty of crimes aren't eager to help the police."

"The News of the World case has shown the British public that their democracy is a farce, with power-hungry politicians who bow to the most loathsome tabloids and money-grubbing police who hide the crimes of these papers. The investigations that Prime Minister Cameron has called for make sense only when they include all sides and lead to consequences. Most of the investigations to date... give no cause for optimism."

Conservative daily Die Welt writes:

"There is more rotten in the state of Great Britain than is dreamt of in our philosophy. And more than just in the media, whose reputation has sunk to an all-time low through the revelations about the Sunday scandal paper News of the World. But this is about more than that. The complicity of some Scotland Yard officials with the surveillance methods of the Murdoch empire are also damaging trust in the country's law enforcement."

Residents in parts of West Sussex reported buildings shaking for a few seconds at about 0800 BST. Sussex Police, Solent Coastguard and West Sussex Fire and Rescue Service said they had not been called out to any incidents related to it.

David Kerridge, from the BGS, said it was the biggest incident of its kind in the area for nearly 300 years. He said: "This is the largest earthquake in this area since a magnitude 4.5 event in 1734. Historically, there have been two other significant events nearby - a magnitude 5.0 earthquake in 1878 and a magnitude 4.3 earthquake in 1750."

The secretary for relations with states in the Vatican Secretariat spoke in his homily Tuesday about the urgency of conversion. He lamented a "loss of European roots. Blinded by progress and well-being, the men of today are only interested in material goods and forget God, or live as if he didn't exist," the archbishop said.

He recommended taking inspiration from the example of St Benedict, patron of Europe. It was the day after the feast of the saint, whom Benedict XVI had mentioned Sunday in the Angelus address. Archbishop Mamberti exhorted the Old World to "find in its culture and in its roots the necessary strength for a spiritual and humanist rebirth."

United Europe - At the end of the Mass, the archbishop and the members of the Diplomatic Corps recollected themselves before the tomb of Blessed John Paul II. Hanna Suchocka, Polish ambassador to the Holy See, thanked the participants and expressed the wish that the Polish Pope will be considered by all as the "patron of a united Europe able to breathe fully with her two lungs."

"Real M1 deposits in Italy have fallen at an annual rate of 7 per cent over the last six months, faster than during the build-up to the great recession in 2008," said Simon Ward from Henderson Global Investors. Such a dramatic contraction of M1 cash and overnight deposits typically heralds a slump six to 12 months later. Italy's economy is already vulnerable - industrial output fell 0.6 per cent in May, and the forward looking PMI surveys have dropped below the recession line.

"What is disturbing is that the numbers in the core eurozone have started to deteriorate sharply as well. Central banks normally back-pedal or reverse policy when M1 starts to fall, so it is amazing that the European Central Bank went ahead with a rate rise this month," Mr Henderson said. Italy has to roll over or raise 1 trillion euros over the next five years, with a big spike as soon as August. "Any new issuance will be above the average rate. That is the real cause of the destructive market action," said Paul Schofield from Cititgroup. The IMF has endorsed Italy's 40 billion euros austerity package, though the measures are "back-loaded" with most of the pain in 2013.

However, RBS said the eurozone storm is far from over. "We expect the crisis to continue deteriorating, and threaten to undermine the entire euro area as European policy-makers still misunderstand market dynamics. They show no sign of catching up with reality," said Jacques Cailloux, the bank's Europe economist.

Mr Cailloux said the EU's bail-out machinery (EFSF) must be increased to nearly 3.5 trillion euros in committed funds to staunch the crisis. This would give the authorities effective firepower of 2 trillion euros. "It is a lot of money but the euro is a big project. This is all about political appetite. The longer they wait, the worse it gets."

"The possibility remains that the recent weakness may prove more persistent," Mr Bernanke told the House Financial Services Committee yesterday. Such a scenario would imply "a need for additional policy support", he said. The comments from the Fed chairman came just a few hours before the ratings agency Moody's warned that the US will lose its prized triple AAA credit rating if Congress fails to lift the country's $14.3 trillion debt ceiling.

The political gridlock on Capitol Hill over the debt ceiling has only intensified anxieties over the economy's faltering recovery. Failure to strike agreement before the August 2 deadline is likely to trigger a first default by the US government. Wall Street, however, seized on the earlier hint by the Fed chairman that the central bank would consider a further round of quantitative easing (QE), or other measures, should the world's largest economy weaken further. The Fed ended its second and far more controversial round of QE, dubbed QE2, last month.

Meanwhile in Europe, leaders were struggling on how to include the private investors in any restructuring of Greece's debt. Germany is insistent that the private sector is involved before it signs off on any further bail-out. The International Monetary Fund backed that call yesterday.

A September 18, 2009, State Department cable on the issue was prepared for an international meeting of the MTCR that year in Rio de Janeiro. The MTCR is an informal association of 34 states that seeks to limit exports of missiles with ranges greater than 185 miles and warheads heavier than 1,000 pounds.

Sent under Secretary of State Hillary Rodham Clinton's signature, the cable included a report on Chinese missile proliferation that on three occasions referred to a "lack of political will" by China to stop missile transfers. "Chinese authorities and firms fail to conduct sufficient evaluations of missile-applicable transactions or to take steps to know their customers," the report said.

Several cables, labelled "secret," were made public on Monday by the anti-secrecy site WikiLeaks, showing Chinese violations or circumventions of the accord.

The Aaa ratings of financial institutions directly linked to the US government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody's said in a statement today.

The US, rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody's said. The rating would likely be reduced to the Aa range and there is no assurance that Moody's would return its top rating even if a default is quickly cured.

"It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there's a longer term fiscal plan to contain spending and the deficit we've been running up over the last few years," said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. "Maybe it's the impetus to say we'll need more of a concession."

With tensions running high in Washington political circles as the clock ticks towards an August 2 deadline for raising the national debt ceiling, the two sides will return for a fifth straight day of talks seemingly farther apart than ever. The meeting follows an acrimonious session Wednesday that laid bare the stark differences between the Democratic president and his Republican rivals over taxes and deficits, a battle whose outcome could have big implications as Obama seeks re-election in 2012.

Heightening the sense of anxiety hanging over already shaky negotiations, Moody's Investors Service jolted Washington on Wednesday with a warning that the United States may lose its top credit rating in the coming weeks if the $14.3 trillion (8.8 trillion pounds) limit on America's borrowing was not raised. That sent the US dollar tumbling against most major currencies. Stock futures and debt prices also fell. The round of talks following Moody's warning was the stormiest yet. Obama told Republicans "Enough's enough" before ending a session that was marked by partisan recriminations, which raised more questions about whether a deal can be reached.

An agreement must be forged to raise America's debt limit by August 2 or the government will run out of money to pay its bills and default on some obligations, but the two sides have failed so far to bridge a sharp divide over taxes.

"The principle of having a euro chiefs' meeting is accepted by the main players, including Germany," said one EU diplomat, adding that it was likely to happen next week despite earlier signals from Berlin that there was no rush to finalise a second package of aid. First, however, countries have to agree how to involve private sector investors in tackling Greece's debt burden, a key demand of Germany before it signs off more support for Athens and a step the International Monetary Fund said on Wednesday must be taken.

"Comprehensive private sector involvement is appropriate, given the scale of financing needs and the desirability of burden sharing," the IMF said in its latest review of the debt-choked country. "Greece's debt service capacity may also need to be bolstered by combining appropriate PSI and official support," IMF officials wrote, referring to private-sector involvement.

Ratings agency Fitch cited continued uncertainty about private-sector participation and foot-dragging on giving more aid to Greece, when it downgraded the country further into junk territory.

News Corp withdrew an attempt to purchase the 61 percent of broadcaster BSkyB it does not already own for $12 billion after the government turned against the media giant. Advisers to BSkyB included Morgan Stanley, UBS and Bank of America Merrill Lynch. News Corp was advised by Deutsche Bank and JPMorgan Chase & Co in the deal.

They were poised to collect a combined $90 million in advisory fees upon completion of the transaction, according to Thomson Reuters and Freeman Consulting. The firms will likely collect only about 10 percent of the potential fee pool, Freeman estimates show.

They show that future payments to retired teachers, police officers and NHS staff will cost taxpayers 1.1 trillion pounds, or 1,100 billion pounds. The enormous figure, which is equal to 80 per cent of Britain's output, is treble the combined national debts of Greece, Spain, Portugal and Ireland.

The future cost of schools and hospitals built under the controversial Private Finance Initiative will pile an extra 40 billion pounds on to our debt mountain. The 1.1 trillion pounds and the 40 billion pounds come on top of the official debt figure of 909 billion pounds. The figures will appear on the Government books for the first time when it publishes full accounts for every Whitehall department.

'Many people would be amazed to know that until now the government did not have a single set of accounts like any company would,' said a Treasury source. After years of foot dragging by the last government we have finally got a true picture of the liabilities that have been built up for future generations.'

Laith Khalaf, a pensions expert at Hargreaves Lansdown, said: 'The cost of public sector pensions has been hidden and downplayed for too long so greater transparency is welcome.' Emma Boon, of the TaxPayers' Alliance, said: 'These latest figures on PFI and the public sector pension liabilities make extremely worrying reading.'

'They will also make it harder for trade unions to continue to resist very necessary changes to public sector pensions.'

The cheapest way for Europe to build a firewall to shield Italy would be to take decisive action this month on a second bailout for Greece, market participants and EU officials say. The longer a decision is delayed, the greater the risk of events getting out of hand in Greece or on capital markets, forcing core nations to take more radical and politically difficult measures to hold the 17-nation currency zone together.

The choice would then be between closer fiscal union and a possible breakup of the euro area. NAB economist Tom Vosa told Reuters Insider TV that Europe would need to quadruple the size of the current bailout mechanism if it needed to support Italy. That would force a shrinking number of creditor countries to commit more capital and guarantees, which seems politically improbable.

So if Italy came under more burning pressure, euro zone leaders would have to reconsider more radical options for fiscal integration which Germany and its allies have so far rejected. Otherwise, the euro area would risk breaking up. "The endgame is probably fiscal union because (the crisis) is just going to move from one country to the next," said Gary Jenkins, head of fixed income at Evolution Securities.

Moody's move comes a week after it slashed Portugal to junk status with a similar warning about the need for a second round of rescue funds. It reflects the credit rating agency's view that any further financial assistance from Brussels will require private investors to share part of the pain, possibly through a debt rollover or swap.

European finance ministers have acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts, and if that materializes, Ireland's rating, never before in junk territory, could be set for a further round of cuts.

Investors fear a Greece default could ripple through Europe's banking system, putting pressure on stretched public finances in other euro zone countries. Italy, the euro zone's third largest economy, looks especially vulnerable with a debt-to-output ratio second only to Greece, and markets fear political bickering may derail a plan to slash spending and rein in the deficit.

Moody's one-notch downgrade on Ireland weighed on stocks and the euro, which hit its lowest level against the dollar in four months.