Lehman Brothers, the fourth biggest American investment bank, filed for bankruptcy early Monday, leaving 30,000 jobless worldwide and $600bn in debt on what some called the most catastrophic day in a century for global financial markets.

The European Central Bank injected 30 billion to steady the markets, followed by the Bank of England, which earmarked 5 billion sterling to arrest the City’s slide.

Lehman Brothers crashed after Barclays and the Bank of America withdrew their bids to rescue the 158-year old banking institution and the federal government refused a bailout.

The Bank of America bought out the limping Merrill Lynch for app. $50 bn, but the American International Group Inc. (AIG), once the world’s largest insurer, is struggling to survive.

Ten US and foreign banks set up a $70bn fund to save troubled companies.

The collapse of the three biggest names on Wall Street threatens to wipe out many billions of dollars from pension funds and the banking and insurance industries in a worldwide chain reaction of turbulence.

World markets fell as The US government and Federal Reserve failed to in their efforts to bring the financial landslide under control over the weekend in time for Monday’s trading.  Some firms linked to the failing banks may be rescued while others will have no option but to file for bankruptcy.  Lehman Brothers’ UK business Pricewaterhouscoopers has been placed into administration.

In a rushed bid to ride out the storm sweeping American finance, 94-year-old Merrill Lynch & Co. agreed late Sunday to sell itself to Bank of America Corp. for roughly $44 billion.

The deal, which was being worked out in 48 hours of frenetic negotiating, could instantly reshape the U.S. banking landscape, making the nation’s prime behemoth even bigger. The boards of the two companies approved the deal Sunday evening, according to people familiar with the matter.

Driven by Chief Executive Kenneth Lewis, Bank of America has already made dozens of acquisitions large and small, including the purchase of ailing mortgage lender Countrywide Financial Corp. earlier this year. In adding Merrill Lynch, it would control the nation’s largest force of stock brokers as well as a well-regarded investment bank.

A combination would create a bank of vast reach, involved in nearly every nook and cranny of the financial system, from credit cards and auto loans to bond and stock underwriting, merger advice and wealth management.

It would also show how the credit crisis has created opportunities for financially sound buyers. At $44 billion, or roughly $29 a share, Merrill would be sold at about two-thirds of its value of one year ago, and half its all-time peak value of early 2007. Merrill shares changed hands at $17.05 each on Friday, after falling sharply in the wake of Lehman’s looming demise.

“Why would Bank of America do this?” said analyst Nancy Bush at NAB Research LLC in Annandale, N.J. “Ken Lewis always likes to buy the biggest thing he can. So why not this? You are master of the universe, basically.”

Bank of America and Merrill Lynch wouldn’t comment on any discussions.

Merrill would give Bank of America strength around the world, including emerging markets such as India. And Merrill is also strong in underwriting, an area Bank of America identified last week at an investors’ conference where it would like to be more aggressive.