WASHINGTON, Sept 30: The US Congress rejection of a $700 billion financial bailout sent shockwaves around the world on Tuesday hitting European banks, putting global markets into a new spin and policymakers on the edge of despair.

As governments struggled to save French-Belgian bank Dexia and markets again swung wildly, leaders around the world expressed alarm at events in Washington and on international markets.

British Prime Minister Gordon Brown said he had sent a message to the White House to underline “the importance that we attach to taking decisive action”.

New Japanese premier Taro Aso said: “We should not let the world financial system collapse.” Australian Prime Minister Kevin Rudd said that he and other US allies would press Washington to take action after what he called the “bad development” of the vote in the US House of Representatives.

Treasury Secretary Henry Paulson warned US lawmakers they had to act fast after his plan was dramatically rejected by the House of Representatives on Monday.

“Markets around the world are under stress,” said Paulson, architect of the proposal under which the US government would buy up to $700 billion of bad mortgage-related assets from banks, wiping dodgy debts from their balance sheets to free them up to start lending again.

“We need to get something done,” he added. “This is much too important to simply let fail.” Paulson and other top US officials were summoned to the White House after the House voted 228-205 against the plan.

Many lawmakers blamed the looming presidential election on November 4 for the failure of the plan which has proved unpopular with the public. David Obey, a Democrat from Wisconsin state, said: “Evidently some of those guys would rather lose an economy than lose an election.” In the fallout, French-Belgian bank Dexia was rescued with injections totalling 6.4 billion euros (9.2 billion dollars) from governments in France, Belgium and Luxembourg, the three countries which saved the giant Fortis bank at the weekend.

French President Nicolas Sarkozy held a pre-dawn crisis meeting with his economic team Tuesday. A senior official in Sarkozy’s office said: “Banks are in trouble in Germany, Belgium and Great Britain. We feel a bit surrounded.”

The euro fell again, to 1.4392 dollars in Tokyo from 1.4432 because “credit worries are deepening over the European financial system,” said Saburo Matsumoto at Sumitomo Trust Bank.

“The euro may fall further,” he said. “We fear the credit worries may spread into emerging economies.” Officials and commentators used the language of disaster to describe the possible impact of further delay in US action on the world economy and especially the global interbank lending system.

Central banks again pumped out huge sums to keep global banking liquid with the European Central Bank renewing one-day loans of 30 billion dollars (20.8 billion euros) and the Japanese central bank injected 3.0 trillion yen (28.8 billion dollars).

France and Ireland reassured people with deposits in banks that their money was safe, echoing similar statements across Europe.

Japan’s economic ministers voiced hope the United States would take action to halt the Wall Street meltdown. The rejection “has a significant impact on not only the US economy but the world economy,” said Kaoru Yosano, the minister for economic and fiscal policy.

There was speculation the world’s top central banks may choose coordinated interest rate cuts to try to prevent credit flows drying up.

“The failure of Congress to approve on Monday the (bailout) plan was not in the script... the markets, particularly equities, have not taken it too well,” said Standard Chartered chief economist Gerard Lyons.

Hiroichi Nishi, equities chief at Nikko Cordial Securities in Tokyo, said: In New York, investment firm executive Marc der Kinderen said that collapsing trust in US financial institutions was potentially the most damaging aspect of the crisis.

BRUSSELS: The European Commission urged the US on Tuesday to “take its responsibility” after US lawmakers rejected a vast Wall Street bailout plan.

“The US must take its responsibility in this situation, must show statesmanship for the sake of their own companies and for the sake of the world,” commission spokesman Johannes Laitenberger told journalists.

“The vote by the US House of Representatives has been a disappointment,” said Laitenberger.

“The turmoil that we are facing has originated in the US, it has become a global problem.”

“We expect that there is going to be a decision very soon” on the package, he added.

The bailout proposal would have granted Treasury Secretary Henry Paulson sweeping authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the flow of credit and reviving the moribund housing market.

The turmoil engulfing the financial sector worldwide has triggered a series of state bailouts in Europe as governments struggle to contain the impact of the US-born crisis.

“Europe and European authorities are assuming their responsibilities,” Laitenberger said.—AFP