WASHINGTON, March 17, 2008 (AFP) - President George W. Bush said Monday he expects the economy to ride out a financial storm that is roiling markets, with the help of his administration and the Federal Reserve.

A day before the Fed is widely expected to unleash another interest rate cut to bolster stalling economic growth, Bush attempted to reassure investors that the government was maintaining a bulwark against a market meltdown.

'The Federal Reserve has moved quickly to bring order to the financial markets,' Bush said in a statement after huddling with his top economic advisors, including Treasury Secretary Henry Paulson and chief economic aide Edward Lazear.

'We're in challenging times,' Bush said, voicing support for the Federal Reserve's emergency moves to add liquidity and stability to the financial system.

The president's remarks came after a series of extraordinary actions by the US central bank over the weekend to unlock a frozen credit system and rescue troubled investment bank Bear Stearns as it teetered on bankruptcy.

In a rare Sunday action to keep cash flowing in the financial system, the Fed lowered a key rate on direct loans to some financial institutions and created a special lending program for securities firms caught in a cash squeeze stemming from the subprime, or high-risk, mortgage crisis.

In addition, the Fed authorized a 30-billion-dollar guarantee to JPMorgan Chase for its takeover of Bear Stearns in view of the battered bank's illiquid assets.

The Fed actions, taken in close cooperation with the Treasury, followed a tumultuous week of trading in a mounting crisis of confidence over a global credit crunch that is causing tens of billions of dollars in losses.

'Secretary Paulson ... is supportive of that action, as am I,' Bush said.

Praising the Treasury chief, a former chief executive at Wall Street investment giant Goldman Sachs, Bush said: 'You've shown the country and the world that the United States is on top of the situation.'

The Fed and rival JPMorgan Chase rode to Bear Stearns' rescue on Friday in an unusual bailout. By late Sunday JPMorgan Chase announced it was buying, with the Fed's backing, the troubled firm for a fraction of its price from just a week ago.

Paulson, meanwhile, defended the government's decision to provide the 30-billion-dollar line of credit to prevent Bear Stearns from going bankrupt, as he declined to speculate on possible intervention in the currency markets to prop up the floundering dollar.

'Bear Stearns had a liquidity crisis. And so we felt it was very important that this be resolved as a way to minimize impact on our economy,' Paulson told reporters at the White House after meeting with Bush and his economic advisers.

'This was an easy decision,' he said.

Asked about possible intervention in the currency markets, Paulson said he would not 'speculate on hypotheticals on intervention.'

He repeated his consistent statements that the US has a 'strong-dollar policy.'

'It's very much in our nation's interest. Our economy has ups and downs. The long-term fundamentals, and I'm very confident about this ... we have strong long-term fundamentals. That will be reflected in our currency markets,' he said.

Investors on Wall Street appeared cool to the Bear Stearns rescue that had sent Asian and European markets into steep nosedives on fears that the financial crisis would soon claim other victims.

The Dow Jones Industrial Average gained 0.18 percent in a sharp turnaround, while the tech-heavy Nasdaq composite fell 1.60 percent and the broad-market Standard & Poor's 500 index declined 0.90 percent.

US Senator Charles Schumer, a New York Democrat, said that the Bear Stearns action was 'a totally necessary move to prevent these serious problems from spreading, and to avert a possible meltdown of the financial system.'

However, he warned that the Republican administration needs to do more to avert an economic crisis.

'Hopefully Bear's problems will wake this administration out of its torpor. If they fail to act to deal with the bulls-eye of this crisis, which is housing, the likelihood of more Bears is too great,' Schumer said in a statement.