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Asia stocks fall after US failure Asia stocks fall after US failure
(about 7 hours later)
Stock markets across Asia have fallen sharply, with some losing 3% of their value, after a US financial rescue plan failed to gain Congressional backing. Stock markets across Asia fell sharply, with some losing over 4% of their value, after a US financial rescue plan failed to get through Congress.
Australia's S&P/ASX-200 index fell 4.3%, while Japan's main Nikkei index ended 4.1% down - a three-year low.
But after an initial precipitous fall, Hong Kong's Hang Seng managed to buck the trend, ending up 0.8%.
The volatility came after the US Dow Jones index saw its biggest one-day points fall, dropping nearly 7%.
In a shock move, the US House of Representatives rejected a $700bn (£380bn) plan to bail out Wall Street.In a shock move, the US House of Representatives rejected a $700bn (£380bn) plan to bail out Wall Street.
Japan's main Nikkei index was down 3% in afternoon trading. It came after the US Dow Jones index saw its biggest one-day points fall, dropping nearly 7%.
US Treasury Secretary Henry Paulson said it was vital to get a new deal.
Day of turmoilDay of turmoil
President George W Bush is to make a statement on the deadlock over the bail-out plan early on Tuesday morning.
Why did the bail-out bill fail?Q&A: US $700bn bail-out plan
But the president has been wholly ineffectual in the crisis so far and it's difficult to see how that might change, says the BBC's North America correspondent Justin Webb.
Congress will not meet again until Thursday, with another vote unlikely before the weekend, the BBC's Jonathan Beale in Washington says.
The House's rejection of the bail-out plan came after a day of turmoil in the US and Europe, with Wachovia, the fourth-largest US bank, being bought by larger rival Citigroup.The House's rejection of the bail-out plan came after a day of turmoil in the US and Europe, with Wachovia, the fourth-largest US bank, being bought by larger rival Citigroup.
In Europe, Benelux banking giant Fortis being partially nationalised by three governments, and the UK lender Bradford & Bingley taken into state ownership. class="" href="/1/hi/business/7643199.stm">Why did the bail-out bill fail? class="" href="/1/hi/business/7631321.stm">Q&A: US $700bn bail-out plan
Now Asia is reacting to the shock, with the Nikkei down 343 points, or 3%, in late trading, after earlier dropping as much as 5%. Asia was quick to react to the shock rejection.
Hong Kong's Hang Seng index was down 433 points, or 2.4%, while Australia and New Zealand saw similar losses, with the S&P/ASX-200 index shedding 3.5% in Sydney and a 3.4% fall in Wellington. In Japan, the benchmark Nikkei stock 225 index fell 483.75 points, or 4.12%, to close at 11,259.86 - the lowest level since 9 June 2005. Taipei shed 3.6%.
South Korea, the Philippines and Singapore also lost ground. But some indices erased losses, with Sydney closing 4.3% down after falling as much as 5.3% and South Korea's Kospi ending down 0.6% after falling as much as 5%.
In Mumbai, the main Indian share index fell 3.3% in early trading. In Hong Kong, it was a day of drama with shares ending up 0.8% after falling more than 6% at one point.
New Zealand, the Philippines, Singapore and Indonesia all lost ground.
Markets in mainland China are closed this week for National Day celebrations.
'Big impact''Big impact'
World leaders expressed concern at the effect of the US vote. In the face of such volatility, regional leaders tried to reassure investors.
"Taiwan's economic fundamentals are still good," President Ma Ying-jeou said in a speech at a local event, reported Reuters news agency. "We have the means to weather this global financial crisis."
Meanwhile Thai Prime Minister Somchai Wongsawat said the situation remained manageable and urged investors "not to be alarmed".
But others rued the failure of the US Congress to pass the emergency bail-out.
"It will have a big impact on the US economy, and it will also greatly affect the global economy," said Japanese Economics Minister Kaoru Yosano."It will have a big impact on the US economy, and it will also greatly affect the global economy," said Japanese Economics Minister Kaoru Yosano.
Australia's Prime Minister Kevin Rudd said he had spoken to his British counterpart Gordon Brown and they agreed to urge the US Congress to reverse Monday's decision. Australia's Prime Minister Kevin Rudd said it was a "bad development".
"The attitude that we will adopt... is to urge the United States Congress to pass this or a similar measure when it is represented to the Congress later this week," said Mr Rudd. He said he had spoken to his British counterpart Gordon Brown and they agreed to urge the US Congress to push through the plan.
Earlier, Brazilian President Luiz Inacio Lula da Silva accused the US and other wealthy nations of financial irresponsibility that could jeopardise the economic progress made in recent years by developing countries. Other countries, such as Indonesia and South Korea, say they will follow US and EU regulators in banning or restricting short-selling of stocks to curb instability in the stock markets.
Brazil's Ibovespa stock index dropped 9.4% on Monday. Meanwhile, the Bank of Japan pumped another 3 trillion yen ($28.7bn; £15.8bn) into money markets as part of the co-ordinated effort by the world's central banks to boost liquidity and lending.
It is the 10th consecutive working day that it has put money into the domestic system.
Washington blockadeWashington blockade
The US rescue plan, a result of tense talks over several days between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives.The US rescue plan, a result of tense talks over several days between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives.
About two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats.About two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats.
Henry Paulson: 'This is much too important to simply let fail'Henry Paulson: 'This is much too important to simply let fail'
Treasury Secretary Henry Paulson said, after talks with the president, that the government's plan to address the crisis facing the US financial sector was much too important to be allowed to fail. After talks with the president, Treasury Secretary Henry Paulson said the government's plan to address the crisis facing the US financial sector was much too important to be allowed to fail.
US regulators would use "all the tools available" to help the US economy, but their powers were "insufficient", he warned.
He added that he would be working with congressional leaders to get something done "as quickly as possible".He added that he would be working with congressional leaders to get something done "as quickly as possible".
Analysts say that without a bail-out plan, the banks will be left to handle all their own bad mortgage debt as best they can and more of them will be in danger of going bust. Analysts say that without a bail-out plan, the banks will be left to handle all their own bad mortgage debt as best they can, and more of them will be in danger of going bust.
But after several hours of impassioned debate, the bill's opponents - the majority of whom were from the Republican Party - got their way.But after several hours of impassioned debate, the bill's opponents - the majority of whom were from the Republican Party - got their way.
They had raised concerns about both the content of the plan and the speed with which they were being asked to pass it.They had raised concerns about both the content of the plan and the speed with which they were being asked to pass it.
Blame game
The no vote plunged the world of Washington politics into turmoil, reports the BBC's Kevin Connolly from the US capital.
Pelosi urges bipartisan approach
So grave are the consequences of this decision, our correspondent says, that the speaker of the house paused for several long minutes after the vote was taken before declaring it official.
"The legislation has failed, the crisis has not gone away," said Nancy Pelosi, the house's Democratic speaker.
She said that 60% of Democrats had supported the bill, and urged both sides to try again to find a resolution.
"We must work in a bipartisan way in order to have another bite at the apple in terms of some legislation," she said.
HAVE YOUR SAY I am glad the bailout bill failed. I work five days a week, save cash and pay my bills. I did not want to pay for Corporate America's greed Lisa, Baltimore Send us your comments
Republican leaders, meanwhile, criticised a scathing speech by Ms Pelosi about the Bush administration's economic policies for injecting partisanship into the issue and scuttling the vote.
Republican house leader John Boehner said: "We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House".
Republican presidential hopeful John McCain accused Democrats of infusing the debate with an unhelpful partisan approach.
"Now is not the time to fix the blame, it's time to fix the problem," he added.
He urged members of Congress to go back to the drawing board "immediately" and work out a new deal.
His Democratic rival Barack Obama countered that it was an outrage that ordinary people were being asked to clean up Wall Street's mess.
"If I am president I will review the entire plan on the day I take office to make sure that it is working to save our economy and (that) you get your money back," he said.
He added that he expected Congress to pass a bail-out bill in some form.
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