MercoPress. South Atlantic News Agency

Asian markets follow Europe, US and Latam in free fall

Japan's benchmark Nikkei stock index has fallen almost 5% in early Tuesday trading, hours after a US financial rescue plan failed to gain Congressional backing.

The US House of Representatives on Monday rejected a 700 billion plan aimed at bailing out Wall Street.

The Dow Jones index fell 7% and suffered its biggest ever one-day point fall, ending 778 down. The lost value of shares was estimated to almost double the rescue package, 1.2 trillion US dollars. Losses in the last twelve months amount to 4.2 trillion US dollars according to The New York Times. At the end of trading the DJI was at its lowest since October 2005 and 21.8% down from twelve months ago. S&P 500 closed with a 8.8% loss the worst in two decades (October 1987) and Nasdaq plummeted 9.1% the greatest since the 1987 crash. President George W Bush is scheduled to make a statement on the deadlock over the bail-out plan early on Tuesday morning. A White House spokesman said that the president was "very disappointed" by the vote's result. Congress will not meet again until Thursday, with another vote unlikely before the weekend, according to BBC's Jonathan Beale in Washington. 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, Benelux banking giant Fortis being partially nationalised by three governments, and the UK lender Bradford & Bingley taken into state ownership. Now Asia is reacting to the shock, and in early trading on Tuesday, the Tokyo Stock Exchange's Nikkei-225 index fell almost 580 points to 11,163.74, a loss of 4.94% of its value in a matter of minutes. Hong Kong's Hang Seng index dropped 5.47% in the first 10 minutes of trading. Australia and New Zealand saw similar precipitous losses, with the S&P/ASX-200 index shedding 5.3% in Sydney and a 4.7% fall in Wellington. World leaders expressed concern at the effect of the US vote. "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 "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. Earlier, Brazilian President Luiz Inacio Lula da Silva accused the US and other wealthy nations of financial irresponsibility that could jeopardize the economic progress made in recent years by developing countries. 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. 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. 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". 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. They had raised concerns about both the content of the plan and the speed with which they were being asked to pass it. 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.