The prime minister was forced to call a vote of confidence after Clemente Mastella, the former justice minister, withdrew his support on Monday. Mr Mastella's Udeur Christian Democrat party has three crucial seats in the Senate, where Mr Prodi had a majority of two, at best. New elections could be called, or a caretaker government could be appointed to reform the complicated electoral law if Mr Prodi loses the vote of confidence in both chambers.

La Stampa, a newspaper, said that the Holy See was trying to meddle in Italian politics. "Prodi's government dared to challenge the ecclesiastical hierarchy for the second time and this time it has had its hands burned," it said. Franco Giordano, a Communist MP, said that Mr Mastella was merely a "loudspeaker" for the Vatican, and that he had switched sides because he was told to. As Mr Mastella announced his defection on Monday, Cardinal Angelo Bagnasco, the head of the Italian Bishops Conference, attacked Mr Prodi. "The country is in pieces," he said. "There is lazy administration and a shirking of responsibility."

He cited the rubbish crisis in Naples and deplored the policy on gay rights. He also accused the government of having blocked the Pope from visiting La Sapienza university after some students demonstrated against the pontiff's perceived anti-science stance.

The Bank's Monetary Policy Committee is scheduled to decide on interest rates on 7 February but now faces huge pressure to act before then. Governor Mervyn King can call an emergency meeting if he wishes. Even Gordon Brown's close ally Ed Balls gave a clear signal today that the Bank should cut interest rates to shield Britain from a global downturn.

In the first half-hour of trading the market looked set for a repeat of yesterday's meltdown with the FTSE 100 index of top shares slumping by 239.5 points. That was a 4.3 per cent fall on top of yesterday's 5.5 per cent crash, bringing the losses over 24 hours to £120 billion.

The Footsie ended the day 161.9 points up at 5740.1. It was the index's first daily rise for a week, and helped claw back some ground after the 5.5 per cent fall yesterday as gloom descended on markets around the world. The 300-point about-turn in less than a hour of trading is thought to be the most dramatic in share market history, excepting declarations of war and 9/11.

David Buik of City bookmakers Cantor Index said: "I've never seen anything like it in all my born days. Everyone's running around like headless chickens." Dealers said share prices were on a knife edge. On Wall Street, the Dow Jones Average slumped 354.7 points to 11744.6 in early trading. This was less than the 500 points expected.

The International Rescue Committee (IRC), which carried out the study with Australia's Burnet Institute, said Democratic Republic of Congo's 1998-2003 war and its aftermath had caused more deaths than any other conflict since World War Two. "CONGO'S LOSS IS EQUIVALENT TO THE ENTIRE POPULATION OF DENMARK OR THE STATE OF COLORADO PERISHING WITHIN A DECADE," George Rupp, president of the aid group, said in a statement.

The findings were published on the day Congo's government and warring eastern rebel and militia factions were due to sign a ceasefire in the hope of halting fighting in the east which has raged on since the nominal end of the 1998-2003 war. Rupp said that although Congo's war formally ended five years ago, "ongoing strife and poverty continue to take a staggering toll. THE CONFLICT AND ITS AFTERMATH, IN TERMS OF FATALITIES, SURPASS ANY OTHER SINCE WORLD WAR II," he added.

Malaria, diarrhea, pneumonia and malnutrition, aggravated by conflict, were the top killers in Congo, the survey said. "Most of the deaths are due to easily treatable and preventable diseases through the collapse of health systems and the disruption of livelihoods," said IRC director of global health programs Richard Brennan, one of the survey's authors.

The US Federal Bank has slashed its interest rates by 0.75%, down to 3.5%, ahead of its meeting next week in a bid to shore up the struggling global economy and stave off a recession.

It is the worst start to the year for the stock market since records began in 1936 and left the Bank of England facing acute pressure to slash interest rates. A quarter point cut to 5.25 per cent is already predicted at the next meeting of its Monetary Policy Committee in two weeks. However, the dramatic volatility suffered by stock markets globally has seen investors head for the exit in their droves. But experts advised private investors today not to panic amid the turmoil.

THE EARLY-MORNING DROP IN SHARE PRICES OF THREE PER CENT was an early indication of another turbulent day to come in trading rooms around the world, with French and German markets also opening down. It came following further falls on Asian markets overnight, as fears of a possible US recession swept through global markets. IT IS THE WORST START TO THE YEAR FOR THE STOCK MARKET SINCE RECORDS BEGAN IN 1936 and left the Bank of England facing acute pressure to slash interest rates.

Since January 2 it has lost nearly 1,000 points, or 13.6 per cent, hammering savings, pensions and other investments. ALL EYES WILL BE ON WALL STREET TODAY when the Dow Jones index re-opens. It was closed yesterday for a holiday, but the futures market remained open and offered a grim portent, falling 546 points or 4.5 percent. Should the Dow follow a similar pattern it would rank as the fourth-largest point loss ever for the New York exchange. Last night experts were forecasting a 400-point drop. David Buik, a partner at the brokers BGC Partners, said: "THE SMELL OF FEAR HANGS OVER THE CITY. I'VE NEVER SEEN IT THIS BAD."

Yet another savings giant yesterday shut the door to investors seeking to take out money. Around 200,000 clients of SCOTTISH WIDOW'S £2 BILLION PROPERTY FUNDS WILL BE FORCED TO WAIT SIX MONTHS TO WITHDRAW THEIR CASH. It is the second firm in a week to hit the panic button over the high number of INVESTORS RUSHING TO BALE OUT.

She was speaking in Brussels after French President Nicolas Sarkozy said a European tax could be imposed on states that refused to cap carbon emissions. Ms Schwab said the United States had been "dismayed" at climate being used as a reason to close markets.

Speaking alongside her, EU trade commissioner Peter Mandelson agreed restrictions were not the way forward. "They're not cost efficient, they carry a risk of retaliation, they would result in increasing cost for European industry at large," he said.

At the end of a rowdy five-hour debate a motion to approve the bill in principle won by 362 votes to 224. But the European Union (Amendment) Bill will be debated line-by-line over the coming weeks. Prime Minister Gordon Brown signed the Lisbon Treaty in December but Parliament must ratify it. It was designed to replace the EU Constitution, which was abandoned in 2005, BUT ON WHICH LABOUR HAD PROMISED A REFERENDUM - the government says a referendum is not needed for the new treaty.

"The government is convinced that Britain's membership of and full engagement with the EU is good for Britain and good for Europe," he told MPs. "We believe this treaty is good for Britain and good for Europe." He warned against THE CONSERVATIVE "MYTH" OF A EUROPEAN SUPER STATE and said the party's policies would lead to "a second decade of institutional inertia that diverts Europe from the real issues that face it". But shadow foreign secretary William Hague said the treaty "BRINGS ABOUT FUNDAMENTAL CHANGE" in the EU's institutional structure, changes which the government "now pretend are matters of little importance about which the people of this country need not be troubled."

Labour MPs Frank Field, Gwyneth Dunwoody and Gisela Stuart were among those who stood up to question whether the treaty was fundamentally different from the constitution. During the lively debate, Tory MP Andrew Robathan was told to retract comments that the foreign secretary's speech was "a rant of propaganda that would be worthy of Goebbels." On Sunday the Commons foreign affairs committee said parts of THE LISBON TREATY WERE NO DIFFERENT FROM THE ABANDONED EU CONSTITUTION, AND ACCUSED THE GOVERNMENT OF PUBLICLY DOWNPLAYING THE IMPORTANCE OF SOME NEW EU INSTITUTIONS AND ROLES.

Millions of people were short of water, and dozens of ships had run aground in the river since October, reports said. China faces droughts and floods annually but has seen a recent increase in extreme weather conditions.
In the major Yangtze port city of Hankou, water levels fell to 13.98m (46ft) in early January - the lowest level since records began in 1866, China Daily said, citing local media.

"This year's drought is rare," the daily quoted a local farmer as saying. "Just days ago, I saw ship after ship running aground. I have never seen that before." Water levels in other rivers and reservoirs in China are also reported to be at record lows. Officials said that an earlier than expected dry season was to blame for the drought. Authorities have already warned that climate change could make weather conditions in China much tougher in the years ahead.

Worst hit is Hubei province, where crops have been destroyed and roads blocked by the heaviest snow seen in the area for 16 years. More than 7.8 million people there have been affected by the weather, a local official told Xinhua news agency. The snow had also cut a transmission line carrying electricity from the massive Three Gorges Dam to the city of Shanghai.

Flights in the region had been delayed and long-distance coaches cancelled, leading to large crowds at railway stations. More snow is forecast for central China over the next two days, meteorologists said.

Objections to the Pope's presence ranged from his alleged hostility to science and Galileo to more specifically anti-religious arguments CHALLENGING THE PRESENCE OF THE HEAD OF THE CATHOLIC CHURCH IN A SECULAR UNIVERSITY. Bishop Donal Murray of Limerick said, "Many voices tell us that religion has no place in the variety, complexity and sophistication of modern life." In fact, he continued, many areas in today's world have become what he termed "RELIGION-FREE ZONES." Moreover, when faith does intervene in public life, it is often in the form of controversies, scandals and personalities, THUS PORTRAYING RELIGION AS SOMETHING CONFLICTIVE.

Behind this trend Bishop Murray identified two underlying assumptions. First, that RELIGION HAS NO PLACE IN PUBLIC DISCOURSE and that religion may be ignored. Second, that IF A PERSON'S VIEWS ON SOCIAL ISSUES ARE INSPIRED BY A RELIGIOUS TRADITION, THEN THEY CAN HAVE NO PLACE IN A RATIONAL DISCUSSION. Therefore, what is really going on, he explained, is not a conflict between religion and the secular, but is rather a conflict between THOSE WHO THINK GOD IS IRRELEVANT and those who believe such a proposition contradicts both faith and a properly understood secular reality. IT IS THOSE WHO SEEK TO IMPOSE AN IDEOLOGY OF SECULARISM THAT ARE CAUSING THE STRIFE, the Irish prelate accused.

The Church offers something different, the then Cardinal Joseph Ratzinger explained. It offers the Son of God, and an adult faith that does not follow the latest trends, but is rooted in friendship with Christ. "It is this friendship that opens us up to all that is good and GIVES US A CRITERION BY WHICH TO DISTINGUISH THE TRUE FROM THE FALSE, AND DECEIT FROM TRUTH," he said.

A large part of the Pope's text was dedicated to reflecting on the nature of a university. At the end of his discourse he warned against the danger that EUROPEAN CULTURE WILL BECOME EXCESSIVELY CONCERNED TO PRESERVE A PURE FORM OF SECULARISM AND THUS RIGIDLY EXCLUDE CHRISTIANITY. This will not, the Pontiff adverted, make reason purer, but will only lead to its destruction. The Church does not impose the faith, instead IT OFFERS THE LIGHT OF CHRIST TO HELP REASON DISCOVER THE TRUTH, HE CONCLUDED. A LIGHT THAT SOME WISH TO EXTINGUISH.

London's leading shares tumbled by 5.5 per cent in brutal market conditions, with the FTSE 100 index losing more than 323 points, ITS STEEPEST POINTS FALL ON RECORD, to end the day at 5,578.2.

GEORGE SOROS, the billionaire investor who prompted Britain's withdrawal from the European exchange-rate mechanism on Black Wednesday in 1992, said the situation was "MUCH MORE SERIOUS THAN ANY FINANCIAL CRISIS SINCE THE END OF THE WAR!" Investors were "drowning in a sea of red," said Henk Potts, an equity strategist at Barclays Stockbrokers.

The losses in London and across Europe came as global markets remained fearful that President Bush's plans for tax cuts to stave off a US recession would not give a big enough boost to growth. Warnings from two leading US banks that the losses from America's sub-prime home loans crisis were spreading to China triggered a sell-off of shares in Asia, which quickly rippled around the world.

NEW YORK stock markets were closed yesterday, but traders will return today with futures markets ALREADY POINTING TO STEEP LOSSES. Fears over the outlook for shares worldwide and broader world economic prospects were stoked yesterday by Mr Soros, who told Der Standard, a Vienna daily newspaper, that THE DANGER OF A US RECESSION SPREADING TO EUROPE WAS CLEAR. "Naturally there is such a threat," he said. "It's just surprising that this has been so little understood."

The timing and tone of Mr Soros's warning struck home with nerve-wracked investors in Europe already in a state of high anxiety over deteriorating US and European conditions. China's financial regulator said banks in his country had also built up a substantial amount of bad loans during an investment boom.

Japan's benchmark Nikkei index plunged 1.5% in the first minute of trading. South Korean shares dropped by around 5%, with Sydney's market continuing its longest losing streak for 26 years, down 7.1% on the day at the close. In Bombay, India's main index fell 9.75% within minutes, triggering an automatic one-hour halt in trading.

The loss in Indian shares came after a fall of 7.41% on Monday, the Sensex's worst day ever. India's Finance Minister P Chidambaram has urged the Indian investors to "remain calm" and advised them to "stay invested".

In Japan, during Tokyo's morning trading session, stocks tumbled more than 4%, hitting new two-year lows. In China, the main Shanghai Composite Index fell more than 5% in early trade, while markets in Taiwan saw similar falls. Hong Kong's Hang Seng Index was also down more than 5% by mid-morning. The decline continued a worrying start to 2008 for Asia's markets. So far this year, Japan's Nikkei has dropped 13%, Hong Kong's Hang Seng is down more than 14% and China's main Shanghai index has slipped almost 7%.

Opposition MPs said the Home Secretary had made an "admission of failure" to the millions of shift-workers who have no option but to brave the threat of violence. Aides of Miss Smith compounded her gaffe with a desperate attempt to undo the damage by claiming she had recently popped out in the evening to "buy a kebab in Peckham". In fact, she has round-the-clock police protection.

Shadow Home Secretary David Davis said: "This is an astonishing admission by the Home Secretary. IT IS SHAMEFUL YOU CAN WALK THE STREETS OF NEW YORK, TOKYO, PARIS AND BERLIN SAFELY AT NIGHT, BUT NOT THE STREETS OF LONDON." And Liberal Democrat MP Sarah Teather said the Home Secretary was "out of touch". "Instead of putting large amounts of money into an ID scheme which is not going to tackle crime, I think they should be putting that money into getting more police on the streets."

The controversy raged as Ministry of Justice figures revealed the steep rise in the number of under-18s convicted or cautioned over violent offences. Total offences FOR TEN-TO-17-YEAR OLDS climbed steadily from 184,474 in 2003 to 222,750 in 2006, the last year for which figures are available - a rise of 21 per cent. But the increase in violent offending was steeper, while ROBBERIES ROSE EVEN MORE DRAMATICALLY, UP 43 PER CENT OVER THE THREE YEARS.

By contrast, ADULT CONVICTIONS and cautions increased by LESS THAN ONE PER CENT. More than HALF OF YOUNG OFFENDERS were let off with cautions, where they admitted their offence but were spared a court appearance and WERE NOT PUNISHED.

FAIR TRIAL GROUPS ATTACK EU PRISON PLAN - THE TELEGRAPH reports that fair trial campaigners have given warning that there will be miscarriages of justice under EU plans to hand over Britons tried and convicted in absentia by foreign courts. Britain does not convict people or hold trials in their absence but many EU countries, including Belgium, France, Spain Greece and Italy, do so on a regular basis.

EUROPEAN PARLIAMENT BREAKS OWN RULES TO STIFLE DEBATE ON LISBON TREATY - IN THE TELEGRAPH Dan Hannan MEP describes how THE EUROPEAN PARLIAMENT BROKE ITS OWN RULES AND PROCEDUREs this week by stopping a group of MEPs from speaking in opposition to the Lisbon Treaty. Hannan suggests that "By refusing to countenance any opposition, the European Parliament has put itself morally in the wrong. And, by failing to follow its own procedures, it has put itself legally in the wrong."

BLAIR FOR PRESIDENT? - In an article in Le Monde former French Prime Minister Edouard Balladur argues that "Tony Blair cannot be President of Europe". He says, "The President of the Union must fulfill two conditions: he/she must come from a country which adheres completely to the progress of the Union and ---participates in all its forms of cooperation; they must be determined to build, notably in the diplomatic and military field, Europe's independence". Europe must move forward, in order to be more present in the diplomatic and military field, but in a way that is independent from the US". He said that it was vital that the President "comes from a country which respects all European commitments."

REVISED EU CONSTITUTION WILL GO AHEAD - EVEN IF A COUNTRY FAILS TO RATIFY - Le Figaro reports - During his speech to the French Assembly yesterday Valery Giscard d'Estaing criticised the fact that the Lisbon Treaty is "practically impossible" to read. Comparing the Treaty to the original Constitution, he said, "the content is very close, but the presentation is different. You can't say that the treaty is simplified, because it's longer than the one before." He also said that if one or more countries does not ratify the Constitution, "that will not prevent the adoption of the text. THAT IS WHEN THESE COUNTRIES WILL HAVE TO ASK FOR A SPECIAL STATUS OR LEAVE" THE EU.

FRENCH CONSTITUTION REVISED - Le Figaro reports - The French Assembly yesterday voted in favour of amending the French Constitution to allow for ratification of the revised EU Constitution. 95 Socialist MPs abstained, 51 voted against and 8 voted in favour.

MPS PUT DOWN A REFERENDUM AMENDMENT ON LISBON TREATY BILL - THE Guardian reports - A cross party group of 20 MPs led by Labour member Ian Davidson has put down an amendment to the Lisbon Treaty bill which notes that all the main parties supported in 2005 a referendum on the Treaty. Davidson is quoted in the Guardian saying "The more amendments and discussion, the more likely people are to come our way. This is the opening clash in [a] war, rather than being the battle."

EU BIOFUEL TARGET COSTS 'WILL OUTWEIGH BENEFITS' - EUobserver FT - The Commission's own scientists have said that an EU plan to increase use of biofuels to 10% of all transport fuel use should be rejected, according to the FT. The unpublished study by the Joint Research Centre, argues that "The costs [of the target] will almost certainly outweigh the benefits. The uncertainty is too great to say whether the EU 10% biofuel target will save greenhouse gas or not," it adds. The report suggests that the transport target be scrapped.

This will create an EU wide set of laws that will govern how electronic communications, including e-mail, SMS, fax and websites operate in the UK. It is also intended that this LATEST POWER GRAB WILL BUILD UPON THE POWERS THE EU ALREADY HAS over radio frequencies and their allocation.

The EU is also seeking to take power over the delivery of television to mobile phones with the aim of limiting technological competition allowing the European Commission to pick winners and control Britain's mobile spectrum rather than leaving the communications operators free to determine how the spectrum is used.