The 1.0 percent fall in U.S. consumer prices in October reflected a sharply weakening economy and raised the prospect of deflation if consumer demand fails to pick up. Construction starts on U.S. homes also hit a record low in October.

“It’s a reflection of very weak demand,” said Carl Lantz, interest rate strategist at Credit Suisse in New York. “The fourth quarter is probably going to be the most intense period of economic weakness.”

European Central Bank President Jean-Claude Trichet said the financial crisis — sparked by a U.S. housing crash and big bank losses that followed — was the first time since World War Two that the industrial world’s finances have been at stake.

The crisis could be solved by central banks and governments in concert, with an important role for the private sector, Trichet told Sky Television late on Tuesday, but said, “It will take time.”

The Bank of England seemed to share his view. Minutes of its last meeting, when it cut interest rates by a shock 1.5 percentage points, showed it had considered an even bigger reduction to tackle the recession.

Thousands of people rioted on Monday in China’s Gansu province and the China Daily quoted Public Security Minister Meng Jianzhu as saying police “should be fully aware of the challenge brought by the global financial crisis and try their best to maintain social stability.”