World markets tumble as House votes down plan

LONDON -- World stock markets tumbled Monday amid a flurry of government bank rescues in Europe that had investors on edge even before the House voted to reject the Bush administration's rescue plan for the nation's financial industry.

Latin American markets were still open when news came that lawmakers on Capitol Hill had rejected the $700 billion bailout.

Stocks in Europe and Asia had earlier ended lower, although less dramatically, as market players fretted about the health of the world's financial system, even with a U.S. bailout.

In Latin America, Brazil's main index took the hardest hit, shedding 9.4 percent to end at 46,028, after falling almost 14 percent during the session.

Argentina's Merval index, meanwhile, dropped 8.7 percent to close at 1,545, while Mexico's IPC index slipped 6.4 percent to close at 23,956. Chile's Ipsa index closed down 5.5 percent to 2,631.

The Toronto Stock Exchange, meanwhile, closed down 840 points, or 7 percent to 11,285. It had been down 955 points Monday in the initial reaction to the vote in the House.

Even before the vote in Washington, markets in Europe and Asia were bleak, as a flurry of developments around the world appeared to confirm 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.

The London Stock Exchange FTSE 100 fell 5.3 percent to 4,819, while Germany's DAX dropped 4.2 percent to 5,807 and France's CAC 40 fell 5.0 percent to 3,953.

In Dublin, the Irish Stock Exchange plummeted 13 percent to 3,292 points.

In Asia, Tokyo's Nikkei 225 index closed down 1.3 percent at 11,743.61, and Hong Kong's Hang Seng Index shed 4.3 percent to 17,881.

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.