Overnight trade on global financial markets has featured a two-year low for US stock prices and a 25-year high for the Australian dollar.

Heightened volatility has been fuelled by crude oil prices, which have dropped sharply.

US President George W Bush concedes the American people face testing times, but is still talking up the economy as “remarkably resilient”.

Federal Reserve chairman Ben Bernanke is looking for an improvement next year, but in the meantime says there are still difficulties arising from the housing downturn, stresses in the banking system and crude oil prices.

The credit crisis has seen more selling pressure for US financial stocks overnight, and the weekend collapse of California’s IndyMac bank is still causing concern.

On the New York Stock Exchange, the Dow Jones industrial average has been as much as 227 points lower, but it has finished 93 points down at 10,963, its weakest close in two years.

The high-tech Nasdaq composite index has added three points to 2,216.

Earlier, prices on the main European exchanges dropped sharply with the French and German markets down around 2 per cent.

It has been an even steeper decline on the British market with London’s FT-100 index losing 129 points to 5,172, a slide of 2.4 per cent.

Yesterday, the Australian market slumped to another two-year low as the banking sector weighed.

The All Ordinaries index plunged 98 points to 4,910.

National Australia Bank shares dropped $1.11, or more than 4 per cent, to $25,36.

Key resource and retail stocks also moved sharply lower.

Looking at the overnight session on the Sydney Futures Exchange and the Share Price Index 200 contract has closed down 37 points at 4,778.

The 10-year bond contract is up three-and-a-half points at 93.74, with the implied yield easing to 6.26 per cent.

On foreign exchange markets, the Australian dollar has peaked overnight at a 25-year high of $US98.51 US cents.

But a falling oil price has since strengthened the US dollar, and the local currency has retreated.

A short time ago, about 7:07am (AEST) it was being quoted at 97.90 US cents, 0.6154 euros, 102.50 Japanese yen, 48.81 pence Sterling, and $NZ1.268.

The gold price was a little firmer at $US977.55 an ounce.

New York oil prices had registered their biggest decline in 17 years on worries the slowing US economy will reduce energy demand.

The spot price of West Texas crude had dropped $US6.48 to $US138.68 a barrel.