US markets took another late plunge yesterday as worries over the ability of financial firms to fund their activities pushed shares in the biggest US mortgage lender sharply lower.

The yield on short-term Treasury bills tumbled, the latest indication that investors are rushing for safe and liquid assets and that financial market liquidity is still in doubt in spite of central bank intervention since last week. This intensified speculation that the US Federal Reserve would be forced to cut interest rates to restore calm and boost liquidity well before its scheduled meeting next month.