European policymakers urged the U.S. Senate on Wednesday to approve a revised $700 billion financial rescue plan aimed at tackling the worst financial crisis since the 1930s.
The contagion stemming from risky home loans has toppled Wall St firms, frozen lending among global banks, and overshadows campaigning as Americans prepare to vote for their next president on Nov. 4.
A revised package which the Senate will vote on sometime after 7:30 p.m. EDT (2330 GMT) would increase to $250,000 from $100,000 the amount of individual deposits guaranteed.
The main aim of the package remains unchanged — to allow the U.S. Treasury to buy toxic mortgage-related assets from banks in a bid to unlock credit markets and head off deeper damage to the U.S. and global economies.
Analysts said a rebound in stock markets over the past two days indicated renewed hopes that the Senate would pass the deal, a move which would put pressure on the House of Representatives to follow suit when it meets on Thursday.
The House threw out on Monday the initial plan assembled by Treasury Secretary Henry Paulson amid anger that ordinary taxpayers were being asked to bail out the banking industry.
For the bill to become law, approval is required by both the Senate and the House of Representatives.
On Wednesday Jean-Claude Juncker, chairman of the euro zone's finance ministers, said the United States had to adopt the plan, a view echoed by Russian finance minister Alexei Kudrin.
"It is the responsibility of the United States to other countries," Kudrin said.
Both U.S. presidential candidates have also urged lawmakers to get the amended package passed.
EUROPEAN ACTION
Lawmakers in Europe are also moving to protect borrowers, with Ireland unveiling a plan covering an estimated 400 billion euros in its banks' liabilities on Tuesday and France pledging measures by the end of the week.
However, Britain said it wants Ireland to look closely at the plan to make sure it complies with European Union competition law, a sign of how hard it is to agree coordinated action to tackle the turmoil.
Underlining worries about the economy, data showed on Wednesday that manufacturing in the euro zone had fallen to a seven-year low in September.
The financial chaos, which has prompted comparisons with the Great Depression of the 1930s, has redrawn the banking landscape in the United States and Europe. Wall Street giants Bear Stearns, Lehman Brothers and Merrill Lynch have been swallowed by rivals, and gone is the investment banking model which dominated for decades after Goldman Sachs and Morgan Stanley sought commercial bank status.
Italy's second biggest player, Unicredit, announced asset sales to restore capital ratios as bank rescues around Europe took shape.
Global money markets remained in near paralysis after London interbank offered rates shot to record levels on Tuesday, as banks hoarded money, refusing to lend to each other. The central banks of Japan and Australia injected extra funds into their markets on Wednesday.
U.S. stocks, after suffering their worst fall in 21 years on Monday when the House of Representatives voted against the bailout proposal, roared back on Tuesday, with the Standard & Poor's 500 index up more than 5 percent in its biggest one-day gain in six years.
By late morning in Europe the FTSEurofirst 300 index of top shares was little changed after paring early gains.
Japan's Nikkei share average closed up 1 percent and Australia's benchmark index jumped 4.2 percent.
