Washington - US stocks fell for a sixth day on Wednesday despite the Federal Reserve's emergency interest cut rate and after the International Monetary Fund warned of a recession until early 2009.

The Fed lowered its target for the federal funds rate by 50 basis points to 1.5 per cent.

It joined the central banks of Britain, Canada, Switzerland, Sweden and China, as well as the eurozone's European Central Bank, which also delivered a 50 basis points cut in their lead rates in a bid to ease monetary conditions and shore up market liquidity.

While investors welcomed the emergency rate cuts, the IMF's semi- annual report on the state of the global economy dampened enthusiasm.

Treasury Secretary Henry Paulson warned that more banks will collapse as the financial system undergoes a prolonged period of restructuring.

A US recession was to be expected as the financial system works its way out of a crisis that has severely curbed the availability of credit to businesses and consumers, the IMF said.

It expected a contraction during the second half of 2008 and growth of a mere 0.1 per cent in 2009 - down from 0.8 per cent in its July forecast. The economy grew by 2 per cent in 2007.

Meanwhile, Bank of America Corp slid 7 per cent after selling shares at a discount, and Alcoa - the largest US aluminium producer - dropped 12 per cent on reduced manufacturing.

The blue-chip Dow Jones Industrial average fell 189.01 points, or 2 per cent, to 9,258.10. In the past week alone, the Dow has shed close to 1,600 points. The broad-based Standard and Poor's 500 lost 11.29 points, or 1.13 per cent, to 984.94. The high-tech Nasdaq Composite index shed 14.55 points, or 0.83 per cent, to 1,740.33.

The dollar slid against the Japanese currency to 99.20 yen from 101.47 yen on Tuesday. It also declined the most against the euro in more than two weeks, dropping to 73.33 euro cents. (dpa)