Iceland nationalised its second-largest bank today under new emergency legislation as it moved to get a grip on the escalating economic crisis.

Russia today pledged a €4bn loan to bolster Iceland’s foreign exchange reserves.

Iceland’s banks face a battle for survival today, after the country’s government introduced emergency legislation giving it sweeping new powers over the collapsing financial sector.

The Icelandic Stock Exchange today halted share trading in six major financial institutions as the government said it was drafting a plan to deal with the financial crisis engulfing the Nordic country.