CORRECTED - TOPWRAP 15-Fed steps in but US stocks dive; UK to rescue banks

(Corrects in paragraph 3 to five days, not three; the error also occurred in previous update, TOPWRAP 14)

* Stocks hammered; S&P 500 drops almost 6 pct

* Fed's Bernanke signals readiness to cut interest rates

* Fed to buy short-term debt of companies

* Britain to announce rescue package for banks

* BofA shares tumble; financial shares under pressure (Recasts first paragraph; adds comment from Bush, Alcoa results, latest on Bank of America, Wachovia)

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By Daniel Trotta and Kevin Krolicki

NEW YORK/WASHINGTON, Oct 7 (Reuters) - The U.S. Federal Reserve stepped forward as a commercial lender of last resort and signaled a readiness to cut interest rates as stocks spun lower for a fifth straight day and pressure mounted for a coordinated, international response to the worst financial crisis since the Great Depression.

Financial shares tumbled, led by Bank of America Corp (BAC.N), a day after the largest U.S. bank said it would sell $10 billion in new stock and stoked fears that other banks may also need to raise capital. [ID:nN07447524]

The British government was readying a rescue package for the UK banking system likely to include public money injected into the banks. That plan will be announced on Wednesday, just five days after the U.S. government approved a $700 billion bailout fund that has failed to calm markets. [ID:nL7351122]

U.S. Federal Reserve Chairman Ben Bernanke said the U.S. economy was being battered by a financial crisis of "historic dimension" and that the risk for inflation has eased with the falling prices for oil and other commodities. [ID:nN07466449] [ID:nN07468076]

"In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate," said Bernanke, who is regarded as an expert on the Great Depression.

In an unprecedented move, the Fed also created a new commercial paper facility that would buy short-term, highly rated debt, stepping into the corporate debt market in a program that falls outside the $700 billion rescue plan approved by the U.S. Congress on Friday. [ID:nN07447246]

Stocks remained under pressure while U.S. government bond prices recovered and gold prices moved higher in a continued flight to safety. [MKTS/GLOB]

The S&P 500 index .SPX shed another 6 percent. That broad measure of the market has now dropped 15 percent over five days, its weakest run since 1987. [ID:nN07442060]