The most severe financial crisis in 80 years affected emerging markets on Wednesday, leading to emergency measures by central banks and requests for international assistance to prevent investors from withdrawing their funds. In the United States, Wachovia Corp, which is being acquired by Wells Fargo & Co, reported a record $23.9 billion loss in the third quarter, highlighting the impact of the global credit crisis. Emerging market stocks, government bonds, and currencies faced significant pressure as investors sold off their positions due to concerns about the weakening global economy. Despite efforts by authorities worldwide to stabilize the financial system, fears of a global recession persisted. Hungary raised interest rates by three percentage points in a bid to protect its forint currency. Belarus's central bank has requested credit from the International Monetary Fund, while Ukrainian Prime Minister Yulia Tymoshenko anticipates her country receiving significant financial aid from the IMF soon. The IMF is also prepared to assist Pakistan and Iceland, both facing financial challenges. Neil Dougall, chief emerging markets economist at Dresdner Kleinwort, believes that capital is shifting back from emerging markets to developed markets, despite the fundamentals for emerging markets remaining unchanged. Various officials were optimistic about the financial crisis despite the problems it presented. Governments worldwide had implemented rescue and liquidity packages worth billions of dollars. U.S. Treasury Undersecretary David McCormick, speaking in Hong Kong, predicted a challenging period ahead for the U.S. economy but suggested a potential recovery by late next year. He stressed the importance of restoring confidence in the financial market. Mervyn King, governor of the Bank of England, believed that the worst may be over for the financial system, although he acknowledged that there was still a long road ahead to achieve stability. The strategy to refinance our banking system, both domestically and internationally, is likely to be recognized as the turning point in the recent banking crisis. This was supported by a decrease in U.S. dollar short-term funding costs in London and Asia, indicating that banks are starting to rebuild trust in each other. Russia, a strong emerging economy, also showed signs of progress in bank lending, with interbank lending beginning to function more smoothly and interest rates gradually decreasing. Banks have resumed lending to sectors, but according to First Deputy Prime Minister Igor Shuvalov, it will take two to three weeks for the situation to start improving. The main concern remains the worsening global economic climate, despite efforts to combat financial collapse. The Bank of England's recent meeting minutes indicated a significant deterioration in the UK economy, with Governor King suggesting it may be heading towards its first recession in 16 years. These concerns have had a ripple effect on financial markets. Wall Street was expected to have a rough start, with Dow Jones industrial average futures down 259 points, or nearly 3 percent. European shares were down over 4.4 percent and Japan's Nikkei average fell by 6.8 percent. In emerging markets, MSCI's sector index hit its lowest level since June 2005, and sovereign debt spreads widened beyond 700 basis points over Treasury yields for the first time since early 2003. Other currencies, except for the forint, were also struggling, with the Turkish lira dropping to its lowest level in over two years and South Africa's rand hitting its lowest point in more than 6 years against the dollar. Sanjay Mathur, an economist at the Royal Bank of Scotland in Singapore, warned of the challenges that come with a business cycle downturn, which is likely to be severe. A variety of US companies reported their results on Wednesday, providing an overview of the different industries and sectors in the largest economy in the world. Despite the overall negative outlook, tobacco companies Philip Morris International and Reynolds American Inc, as well as fast-food chain McDonald's Corp, exceeded analysts' expectations with their quarterly profits.