In response to questioning, Geithner said mortgage-finance giants Fannie and Freddie were at the center of a system that “was in many ways the envy of the world” for many decades. “It’s important as we think about the future to make sure we retain what was good in this system,” he said.

But the Treasury secretary said that the old system would not be re-created and that Fannie and Freddie’s status as shareholder-owned companies with the implicit backing of taxpayers would end. “We’re going to have to do fundamental change,” Geithner said, adding that the government would make clear what it stands behind and what it doesn’t.

Fannie and Freddie, under federal control, have played essential roles in the government’s strategy for reviving the housing market, but they have needed more than $125 billion in taxpayer aid to stay afloat. In large part, they operate by guaranteeing that investors in home loans are made whole. The Obama administration has pledged unlimited assistance to them.

He said keeping the yuan stable was “an important contribution” to global recovery from the economic downturn. He was speaking at the end of China’s annual parliamentary session.

Mr Wen also said that recent strains in ties with the US were Washington’s fault, citing arms sales to Taiwan and a White House visit by the Dalai Lama.

Speaking to reporters in Beijing, Mr Wen denied China’s currency, the yuan, also known as the renminbi, was undervalued.

US legislators and trade groups say the yuan is kept up to 40% below what its value should be against the US dollar. “I don’t think the renminbi is undervalued,” Mr Wen said at Sunday’s news conference in the Great Hall of the People.

“We oppose all countries engaging in mutual finger-pointing or taking strong measures to force other nations to appreciate their currencies.”

Total profits for the year were $11.7bn, the bank said, with investment banking providing the bulk of the earnings.

Staff compensation – made up of salaries and bonuses – totalled $27bn for the year. Investment bankers earned $9.3bn in pay and bonuses. Jamie Dimon, JP Morgan’s chairman and chief executive, said he was pleased with the bank’s performance, but said it could be better.

“Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential,” he said.

Virgin Money, the consumer credit arm of Richard Branson’s Virgin Group, has been one of several names mentioned as potential new entrants as rescued UK lenders sell off assets and nationalised mortgage bank Northern Rock is prepared for sale.

The acquisition — a toehold in the sector expected to total around 50 million pounds ($80.5 million), including a capital injection to meet regulatory requirements — could be announced “within weeks,” and the group could receive the necessary regulatory approval around the same time, the sources said.

Completion of the deal would take several weeks longer. The target is not expected to be listed, one of the sources said.

One source familiar with the procedure, however, cautioned regulatory approval to take on a deposit-taking institution, virtually as complex as the process of applying for a banking licence from scratch, could take over a year, a delay that would not bring Virgin Bank into existence before the fourth quarter.

ADIA, one of the largest sovereign wealth funds in the world, agreed the $7.5bn investment into Citigroup at the height of the banking crisis.

This was to be converted into shares at a price of $31.83-$37.24 a share between March 2010 and September 2011.

However, Citigroup’s share price was at $3.56 by the close of trade on Tuesday – about a 10th of the value at which Abu Dhabi agreed to pay in 2007 – and ADIA no longer wants to go ahead with the plan.

Citigroup says Abu Dhabi is alleging “fraudulent misrepresentation”, a claim the bank says is “entirely without merit and intends to defend against them vigorously”.

Citigroup’s shareholder base has been heavily diluted by the banking meltdown. The US government gave it $45bn from its Troubled Asset Relief Programme (Tarp), $25bn of which was converted into a 34% stake in the bank.

Earlier this week, Citigroup said it would issue even more shares in order to pay back the remaining $20bn and cut loose from government support.

The move by ADIA appears to be the first court case resulting from investments which were made in western banks by a number of sovereign wealth funds during the economic crisis

The fall reflects the extension of first-time buyer tax credits, which had been due to expire in November.

The total was far lower than analysts had expected, and the data wiped out early gains in shares on Wall Street.

The main Dow Jones index closed only slightly higher, up 1.51 points, or 0.01%, to 10,466.44.

Home sales had been boosted by buyers looking to take advantage of the tax credit, but now that they have been extended to April, the incentive to buy has disappeared, analysts say.

As a result, “buyer traffic is likely to be flat until spring,” predicted Mark Vitner at Wells Fargo Securities.

The median sales price for November was $217,000.

The dollar fell to 86.28 yen in early Thursday trading, it’s lowest level since 1995, before recovering to 86.61.

The US has indicated it is unconcerned about the dollar’s slide, and will not intervene to strengthen it.

Many traders are swapping dollar holdings for gold as a safer investment in the current economic climate.

The price of gold hit a fresh record high of $1,194.9 per ounce on Thursday, before falling back slightly to $1,182.4.

In fact, Australia managed to avoid recession, only seeing its economy contract in the last quarter of 2008.

And the release of the lowest inflation figures in 10 years last week added to expectations of a modest rate rise.

Australia has spent heavily on schemes including cash handouts for pensioners and for low and middle-income families, and a number of infrastructure projects.

This helped the economy to grow 0.4% in the first quarter of this year, and by 0.6% in the second, rebounding from the 0.5% contraction between October and December 2008.

Its strength in the Indian market has meant it has performed better than its rivals, which rely more on US sales. It reported six-month net profits of 12.5bn yen ($139m; £85m) which was 63% down on the same period last year.

Suzuki is now predicting full year net profit of 15bn yen, up from the 5bn yen it forecast in May.

Last week, India’s biggest carmaker Maruti Suzuki India, of which Suzuki owns a major stake, reported its quarterly profit had almost doubled.

But Suzuki’s boss has warned of an uncertain outlook when government scrappage schemes end.

“It’s doubtful whether these scrappage incentives would switch smoothly into real demand,” said chief executive Osamu Suzuki.

Meanwhile Toyota subsidiary Daihatsu said its net profit fell by 60% in the six months to September, to 6.8bn yen

US light crude rose to $81.43 a barrel, before slipping back to $80.50. London Brent also climbed before dropping back to $78.82 a barrel.

The price was boosted by figures released on Thursday showing China’s economic growth had accelerated.

But a strengthening dollar caused the price to fall in afternoon trading.

The price of oil has risen in recent weeks, largely on the back of strong company results in the US which have fuelled optimism for the global economic recovery.

But there are concerns that sentiment, rather than fundamentals, is driving the oil price, and that once these fundamentals re-establish themselves, the price may fall.

These include spare capacity, stock piles of oil and weak demand among industrialized nations.