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World financial crisis

Asian markets plunge after US bailout plan fails to pass

Article published on the 2008-09-30 Latest update 2008-09-30 06:38 TU

Major indices in Tokyo, 30 September(Photo: Reuters/Issei Kato)

Major indices in Tokyo, 30 September
(Photo: Reuters/Issei Kato)

Stock markets around the world plummeted after the United States House of Representatives rejected a 700 billion dollar bank bailout plan Monday. The House voted 228 to 205 against the bill that would have the government buy bank debts tied to subprime mortgages. In reaction, US stocks lost 1.2 trillion dollars in one day of trading on Monday.

In Tokyo, the Nikkei fell by 4.9 per cent in minutes, hitting a three-year low before coming back slightly. Hong Kong's Hang Seng index opened down 5.6 per cent.

Taiwan and South Korea suffered similar losses when trading started, but managed to come back my midday. Australian shares closed down 4.3 percent

Leaders around the world have expressed concern over the fallout of the vote. Australian Prime Minister Kevin Rudd said he and others would press Washington to take action.

"This is necessary for the stabilisation of US financial markets  and necessary for stabilisation of global financial markets," he said. "We intend to be arguing this case strongly - robustly - in the days ahead."

The US Treasury Secretary Henry Paulson, who was the architect of the bailout plan, urged congress to act quickly.

"I will continue to work with congressional leaders to find a way forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy," he said. "We've got much work to do, and this is much too important to simply let fail."

Republicans and Democrats blamed each other for the vote, but members of both parties are facing pressure from angry constituents who object to the plan, just five weeks before every seat in the House is up for re-election.

The House leadership said Monday night that the House would reconvene at noon Thursday.