FIRST EMERGENCY WEEKEND MEETING IN 30 YEARS.

European and Asian stock markets have dropped sharply Monday, and the dollar fell, hours after the U.S. Central Bank made moves to avert a credit crisis that threatens to plunge the U.S. economy into recession.

Japanese stocks fell nearly four percent, and Hong Kong shed more than five percent. Major European markets are down more than two percent toward midday.

Meanwhile, the dollar fell against the yen and the euro, while oil prices hit a record high of nearly $112 a barrel in Asia.

Late Sunday, the U.S. Federal Reserve cut its lending rate to financial institutions (a quarter point to 3.25 percent), and said a new lending facility opens Monday, allowing big investment banks access to short-term loans.

U.S. banking giant JPMorgan Chase agreed Sunday to buy troubled Bear Stearns at a cut-rate price.

The bank sale valued Bear Stearns at about $250 million, far less than the $4 billion market value at the end of last week.

The Federal Reserve is expected to help fund some of the transaction.

Federal Reserve Chairman Ben Bernanke said the lending rate cut and the new lending facility will assure financial institutions that they will have access to funds.

The Federal Reserves Open Market Committee meets this week and most analysts say it will cut interest rates further.