Housing market still on slide as petrol prices spiral

Federal Reserve chairman Ben Bernanke is poised to make a second emergency cut in interest rates this Wednesday, as the chaos from the sub-prime mortgage fiasco ripples through America's economy, exposing hundreds of thousands of families to the threat of losing their homes.

The average price of existing homes has dropped by 6 per cent in six months, but analysts are warning that the worst is still not over for American homeowners.

At the same time, America's anxious consumers are contending with eye-watering petrol prices.

Tensions between the Turkish government and Kurdish militants, and growing fears that Washington could be planning an attack on Iran, have helped oil prices to smash records repeatedly in the past month.

Another reason for the jump in the oil price is the renewed slide in the dollar.