Global stocks mixed before U.S. Senate vote

The Senate will vote soon on a revised 700-billion-dollar Wall Street bailout, after the House of Representatives sparked markets chaos by rejecting an earlier version.

In opening trade on Wednesday, New York’s Dow Jones Industrial Average dropped 0.95 percent to 10,747.92 points.

Across the Atlantic, the London stock market bounced 1.69 percent higher and Paris was stable in late afternoon deals, while Frankfurt was dragged 0.56 percent lower on the back of struggling automakers.

Volatility returned as U.S. markets resumed a downward trend after a record point drop for blue chips on Monday, which was followed by a rebound that recovered more than half the losses on Tuesday.

"A financial rescue plan is still expected to pass but political uncertainty is keeping nervous markets guessing about what may happen next, which is encouraging some profit taking following yesterdays steep rally," said analysts at Charles Schwab & Co.

Stocks rose in Asia and in most European markets as hopes grew that the new bank bailout plan could also clear Congress this week.

"All eyes are still firmly fixed on the progress of the 700-billion-dollar bailout," said City Index market strategist Joshua Raymond in London.

"We have the vote in the Senate tonight which, given the markets reaction and the fact that only a third of senators are up for re-election in November, is expected to pass."

Tokyo jumped 0.96 percent and Sydney soared 4.2 percent. Many Asian markets were shut for public holidays including Hong Kong.

Dealers said the chorus of concern following U.S. lawmakers’ rejection of the Treasury’s proposed bank bailout had raised hopes that a new package can be approved before the crisis spirals out of control.

"The Senate will vote on a new version of the rescue bill today ... with the hope this will build momentum for passage of the bill in the House on Thursday," added Barclays Capital analyst David Woo.

The package is expected to have a much easier path through the 100-member chamber than it had in the House, where in a shock vote, members rejected it by 228 votes to 205.

"There are expectations that lawmakers will pass a bailout bill by midweek or the government will come up with a new plan," said Kazuhiro Takahashi, equity manager at Daiwa Securities SMBC.

"But the markets have not fully recovered amid lingering caution."

The Bank of Japan announced just before the opening bell that the nation’s business confidence had fallen to the lowest level in five years in September as Asia’s largest economy skirts recession.

The central bank pumped emergency funds into the short-term money market for an 11th straight business day to try to ease strains on the financial system, making two injections of 800 billion yen.

The fear is that if credit flows -- the lifeblood of the global economy -- dry up, then a worldwide recession may follow.

The Bank of England meanwhile offered a total of 40 billion dollars (28 billion euros) in short-term loans to banking institutions hit by the global credit crunch.