NEW YORK - WALL Street fell in early trading on Monday as investors nervously await further news about the government's plan to buy US$700 billion (S$994 billion) in banks' mortgage debt.

Investors are relieved that federal authorities are taking action to relieve the nation's banks of their toxic assets. But it is not sure yet how successful the plan will be in loosening up the credit markets and propping up the sinking housing market.

Bush administration officials and congressional leaders have been meeting on the rescue plan, the main thrust of which congressional leaders have endorsed.

Investors are also digesting a mix of corporate news. Microsoft Corp. said it plans to repurchase its shares.

And Morgan Stanley said it is working to sell up to a 20 per cent stake to Japan's Mitsubishi UFJ Financial Group Inc.

Late Sunday, the Federal Reserve granted Morgan Stanley and Goldman Sachs, the country's last two major investment banks, approval to change their status to bank holding companies.

The change of status will allow the companies to set up commercial banks that will be able to take deposits, significantly bolstering the resources of both.

That shift came a week after negotiations failed to save Lehman Brothers Holdings Inc. That and the government's plan to bail out American International Group Inc. helped lead to a seizing up of the credit markets that spurred the government to formulate its plan to rescue companies from their crippling debt.

The yield on the 3-month Treasury bill remained below 1 per cent, indicating that investors were still willing to take low returns on a safe asset.

In the first hour of trading, the Dow Jones industrial average fell 102.34, or 0.90 per cent, to 11,286.10.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 14.24, or 1.00 per cent, to 1,240.84, and the Nasdaq composite index fell 25.50, or 1.12 per cent, to 2,248.40. -- AP