Markets slide ahead of U.S. bailout voteWorld markets fall as they await the vote by U.S. lawmakers on the biggest proposed government intervention in the U.S. economy since the Great Depression of 1929. Government officials, Treasury chiefs and political leaders agreed Sunday the details of a $700 billion rescue plan to prop up the nation's ailing financial system.
Analysts said the flurry of developments around the world is confirming fears that the global financial contagion is likely to spread further before any recovery.
"There's an increasing realization that the cleanup and the mending of all that's gone wrong is going to take an extended period to work through, and we're going to see an extended recovery period," said Jamie Spiteri, senior dealer at Shaw Stockbroking in Sydney.
Britain's FTSE 100 fell 4.16 percent, Germany's DAX index fell 3.87 percent, and France's CAC-40 fell 4.90 percent.
In Asia, Tokyo's Nikkei 225 index closed down 1.3 percent at 11,743.61, and Hong Kong's Hang Seng Index shed 2.1 percent to 18,286.90.
In late morning New York trading, the Dow fell 289.68, or 2.60 percent, to 10,853.45 after having been down more than 350.
The markets were responding in part to news that Dutch-Belgian banking giant Fortis NV was partially nationalized with a 11.2 billion euros ($16.4 billion) rescue from the governments of Belgium, the Netherlands and Luxembourg, after investor confidence in the bank disappeared last week.
"They're worried that another fire is starting in Europe," said Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong, referring to the Fortis news.
In other activity across Europe, the British government nationalized mortgage lender Bradford & Bingley, taking over the bank's 50 billion pound ($91 billion) mortgage and loan books. In a similar move, the Icelandic government bought a 75 percent stake in Glitnir, the country's third largest bank, for 600 million euros ($878 million) to ensure broader market stability after it suffered liquidity issues.
In Germany, the country's second biggest commercial property lender, Hypo Real Estate Holding AG, said it had secured a multibillion euro line of credit from several banks.
The banking turmoil across Europe comes ahead of a vote by U.S. lawmakers on a $700 billion public bailout of the ailing financial industry. After days of intense talks, the White House and Congressional leaders agreed Sunday to the bailout after lawmakers insisted on sharing spending controls with the administration of President Bush.
