LONDON - WALL Street stocks sank on Friday after sharp losses in Asia and Europe as US talks on a US$700-billion(S$996-billion) rescue deal that could throw a lifeline to the crisis-ridden financial sector hit an impasse.

Wall Street tumbled 1.19 per cent in opening deals as investor jitters also surfaced over the biggest bank failure in US history.

US President George W. Bush made a fresh push on Friday to unlock negotiations on a massive financial rescue plan, warning that 'we've got a big problem' and stressing 'we need a rescue plan'.

World equities pulled back after a rally Thursday on hopes of an agreement on a US government plan to buy toxic mortgage-related assets from firms at the heart of the credit crunch.

But those hopes faded after an apparent talks stalemate.

'There are disagreements over aspects of the rescue plan - but there is no disagreement that something substantial must be done,' Mr Bush said one day after unprecedented White House crisis talks failed to yield a breakthrough.

The US Federal Reserve and other major global banks meanwhile pumped billions of dollars into money markets pending a possible deal in Washington to end the worst financial crisis in decades.

In late afternoon European trade, London dropped 2.23 per cent, Frankfurt slid 1.80 per cent and Paris shed 2.16 per cent in value.

In Asia, Tokyo closed down 0.94 percent, Sydney slipped 0.5 percent and Hong Kong lost 1.3 percent.

Pressure on markets increased with the overnight collapse of Washington Mutual, the biggest US bank failure, which was taken over by JPMorgan Chase for 1.9 billion dollars.

Leading Democrats on Friday charged that Republicans were holding up a rescue deal on the rattled financial sector by brandishing an 'ambush plan' of their own at the last minute.

'This financial version of 'Deal Or No Deal' is not conducive to restoring badly-needed confidence,' said Martin Slaney, head of derivatives at spread betting firm GFT in London.

'If anything, reports of an alternative plan have added to the uncertainty.

'Timing is the key issue here. If a deal hasn't been signed and sealed over the weekend, expect massive market turmoil. Monday will be a bloodbath.'

Republican presidential hopeful John McCain stood accused by angry Democrats of sabotaging a deal so as to salvage his electoral fortunes against his opponent in the November 4 election, Barack Obama.

'Wall Street continues to be riveted on the progress of the financial-mortgage plan through Congress,' added Fred Dickson at DA Davidson & Co.

'Right now, Wall Street will have to digest the fact that Congress cannot agree on the structure of a rescue plan with time ticking down on the ability of the banking system to obtain, then provide normal levels of funding to maintain normal economic activity.'

Global stock markets were buoyed on Thursday by hopes that a US rescue package would be agreed soon.

Barclays Capital analyst David Woo expressed hope that a deal would be reached soon.

'Talks are set to resume today (Friday) and a deal remains likely to be reached, especially since the failure of Washington Mutual has raised the stakes even further,' Mr Woo said in a research note to clients.

'But until a rescue package is finalised, some of yesterday's market moves in anticipation of a plan being announced ... are likely to unwind somewhat.' The US financial rescue hold-up also sent oil prices down, traders said.

New York's main contract, light sweet crude for November delivery, fell US$2.62 to US$105.40 per barrel. The contract had risen US$2.29 on Thursday as a deal appeared imminent.

New York stocks had also gained 1.82 per cent on Thursday as investors had sensed that Congress was on the verge of agreement.

Global markets have been sent into a tailspin since the collapse last week of Wall Street investment giant Lehman Brothers and the US government's rescue of insurance giant AIG.

The crisis claimed another victim on Thursday as the US government closed down Washington Mutual.

The volatile financial environment has also led to global banking giant HSBC cutting 1,100 staff worldwide.

Meanwhile it emerged on Friday that Nomura Holdings would pay a token two dollars for the Europe and Middle East operations of bankrupt Wall Street giant Lehman Brothers.

The top Japanese broker would acquire only Lehman's employees in the regions, and not its stocks, bonds or other assets, the Nikkei business daily reported. -- AFP

TOKYO
Japanese share prices skidded lower Friday as US political wrangling over a proposed Wall Street bailout plan kept investors cautious, dealers said.

The Tokyo Stock Exchange's benchmark Nikkei-225 index lost 113.37 points or 0.94 per cent to end at 11,893.16. The broader Topix index of all first-section shares dropped 6.06 points or 0.53 per cent to 1,147.89.

'Investors can't make any bold moves before the weekend amid uncertainties over the US bailout bills,' Traders Securities manager Tamotsu Numazaki told Dow Jones Newswires.

US stocks surged overnight on optimism that the US Congress was on the verge of an agreement over the proposed rescue package for the troubled financial sector.

But hopes that a deal was imminent faded as top lawmakers from the two parties struggled to bridge their differences over the contents of the plan.

'If good news about a US bailout plan doesn't come out by Monday morning in Japan, it may cause a further sell-off,' said Fujio Ando, senior managing director at Chibagin Asset Management.

In that case, the Nikkei index may target 11,600 points, he said.

Shipping shares were hit by falling freight charges. Kawasaki Kisen dropped 7.2 per cent to 670 yen and Mitsui OSK Lines slipped 6.3 per cent to 946.

Commodity-linked shares were also under pressure. Mitsui & Co. fell 5.0 per cent to 1,423 yen and Itochu shed 3.8 per cent to 680.

But drug issues were boosted by Takeda Pharmaceutical's share buyback plan.

Takeda gained 4.2 per cent to 5,670 and Eisai added 2.6 per cent to 4,280.

On the foreign exchange market, the dollar slipped to 105.68 yen in Tokyo afternoon trade from 106.53 in New York late on Thursday. The euro eased to 154.63 yen from 155.65.

SHANGHAI
hinese share prices closed down slightly Friday, losing 0.16 per cent in cautious trading in the final session before the weeklong National Day holiday, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, was down 3.72 points at 2,293.78 on turnover of 66.6 billion yuan (S$13.8 billion dollars).

The Shanghai A-share index fell 4.03 points, or 0.17 percent, to 2,408.88 points on turnover of 66.5 billion yuan, while the Shenzhen A-share index was up 6.51 points, or 1.02 per cent, to 644.95 on turnover of 26.5 billion yuan.

HONG KONG
Hong Kong share prices closed down 1.3 per cent on Friday, as uncertainty over a US financial rescue plan kept investors away, dealers said.

The benchmark Hang Seng Index closed down 252.34 points at 18,682.09.

MALAYSIA
Malaysian share prices closed 0.4 per cent lower on Friday amid local political concerns and the upcoming Eid al-Fitr Muslim holidays, dealers said.

The Kuala Lumpur Composite Index dropped 4.21 points to close at 1,020.53. -- AFP