US shares fall back ahead of vote

Global stock markets have had a torrid few weeks

US shares have fallen back slightly as investors wait for a key vote in the US Senate on a revised version of the $700bn (£380bn) bank rescue plan.

Despite hopes that enough changes have been made to get the bill passed, investors remain nervous.

If the Senate does approve the bill it will still have to go to the House of Representatives, which voted against the first version on Monday.

The Dow Jones index closed down 0.2%, 19.6 points to 10,831.1.

The Nasdaq index moved 1.1% lower to 2.069.4 points.

In Europe shares were mixed, with the UK's FTSE 100 index finishing 1.1% higher at 4,959.6 points while France's key index added 0.6% but Germany's Dax 30 index slipped 0.4%.

Earlier Japan's Nikkei index had ended up 1%, while Australia's main index closed up 4%.

Mixed picture

As the Senate prepared for the crucial vote, other events in another eventful day included:

• Shares in Lloyds TSB and HBOS rising strongly after Prime Minister Gordon Brown expressed confidence Lloyds' takeover of its rival would go ahead

• European Union Competition Commissioner, Neelie Kroes, speaking to the Irish government over Dublin's move to guarantee all bank deposits amid concerns it may be anti-competitive
• EU Commission president Jose Manuel Barroso saying Europe needed to inject "credibility" into its efforts to tackle the financial crisis, calling on member states to start working closer together
• French finance minister Christine Lagarde denying there were plans for an emergency EU bail-out fund to help banks on the brink of going under - but saying she wanted a level playing field among EU countries when it came to accounting rules.
• The Italian government pledging measures to guarantee stability in its banking system - after its leading bank UniCredit saw its shares take a battering
• The French government denying a report that one of the country's major savings banks, the Caisse d'Epargne, had needed a cash injection

• The Bank of England pumping a further $30bn (£17bn) into financial markets, while the European Central Bank added $50bn
• US conglomerate General Electric - which had seen its shares fall on forecast of profits dropping - announcing plans to raise $12bn from selling new shares, as well as a $3bn investment from Warren Buffett.

Political momentum

The new US bail-out package is broadly similar to the first, but includes new measures to help gain Congress's backing.

People are cautious and they lack confidence that a bailout plan will be a one-stop solution Andre Bakhos, Princeton Financial Financial crisis in graphics

One of the new clauses will raise the government's guarantee on savings from $100,000 (£56,000) to $250,000.

To get through the Senate, the bill will require the backing by 60 of the 100 senators.

However, it will then have to return to the House of Representatives on Thursday.

"Blind faith doesn't work this time after Monday's disappointment," said analyst Andre Bakhos, president of Princeton Financial Group.

"People are cautious and they lack confidence that a bailout plan will be a one-stop solution. It won't be."

'Responsible bill'

The BBC's Jonathan Beale, in Washington, says a positive vote in the Senate is likely to give the bill momentum when it goes back to the House.

World News America's Jennifer Copestake interviewed voters in Poplar Bluff, Missouri about the rejection of the bail-out plan.

Presidential candidates John McCain and Barack Obama, who both support Mr Bush's efforts to bail out the economy, say they will return from campaigning to vote in the Senate.

And senior Democrats have pledged to find a bipartisan solution.

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Banks are now crying that they have 'no money to lend" due to their over exposure in the US mortgage scandal.

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However, some members of Congress continue to press for more fundamental changes, such as insurance for bad loans, rather than the removal of the loans from the books of financial companies, says the BBC's Americas editor Justin Webb.

On Tuesday President Bush had warned of "painful and lasting" consequences for the US should Congress fail to agree a rescue plan.

Analysts say the Senate is more likely to pass the bill because senators are not facing the same pressure from voters - who are generally opposed to the bailout - as members of the House.

All representatives face re-election in November compared with only one-third of senators.