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Stocks head for lower open ahead of bailout vote

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[September 29, 2008]  NEW YORK (AP) -- Financial markets headed for another difficult session Monday ahead of a planned House vote on an unpopular $700 billion plan to rescue troubled financial companies. Stock futures fell sharply as investors feared the measure won't pass and that credit markets will remain nearly frozen.

Demand for safe-haven buying in government debt remained high ahead of the vote.

President Bush and other congressional leaders looked to shore up support for the measure, which they and many on Wall Street believe is a difficult but necessary choice to revive moribund credit markets. Banks and other financial houses are hesitant to lend to one another because of fears about bad mortgage debt on companies' books.

Tight lending conditions make it harder and more expensive for businesses and consumers to get a loan, which can hurt the economy.

While congressional leaders said they had the headcount to pass the vote -- a Senate vote could come as early as Wednesday -- investors were likely to remain unnerved until the votes are complete.

To tamp down criticism of the plan, Congress can restrict how much of the money goes out the door at once. It also includes limits on pay packages of top executives.


Dow Jones industrial average futures fell 198, or 1.78 percent, to 10,950. Standard & Poor's 500 index futures fell 23.10, or 1.90 percent, to 1,191.40, and Nasdaq 100 index futures fell 34.75, or 2.07 percent, to 1,640.

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Credit markets remained strained Monday. The yield on the 3-month Treasury bill, considered the safest short-term investment, fell to 0.82 percent from 0.87 percent late Friday. The yield on the T-ball falls as demand grows; investors are at times willing to take the slimmest returns to safeguard their principal. The yield on the benchmark 10-year Treasury note rose to 3.86 percent from 3.84 percent late Thursday.

The dollar was mixed against other major currencies, while gold prices rose.

Investors overseas were nervous the bill wouldn't get the votes. Japan's Nikkei stock average fell 1.26 percent. Britain's FTSE 100 declined 2.94 percent, Germany's DAX index fell 2.55 percent, and France's CAC-40 fell 2.73 percent.


On the Net:

New York Stock Exchange: http://www.nyse.com/

Nasdaq Stock Market: http://www.nasdaq.com/

[Associated Press; By TIM PARADIS]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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