Britain isolated over Yugoslavia: France, Italy and the US back use of military force as Serbian tanks join fierce fighting in Sarajevo

THE DOLLAR dropped to its lowest level for 17 months yesterday as expectations of an early cut in European interest rates faded. German officials played down hopes expressed by Nicholas Brady, US Treasury Secretary, that the Bundesbank would soon ease monetary policy.

Leaders of the Group of Seven leading economies will call for lower interest rates today, but there is little indication of early action. They will also call for agreement on international trade talks by the end of the year - a subject on which heads of government also failed to achieve anything yesterday despite an initiative from John Major.

US economic gloom, page 22