European stocks volatile after Wall Street plunge; Asia falls

HONG KONG -- The historic carnage on Wall Street reverberated across Europe on Tuesday, with stocks volatile after U.S. lawmakers rejected a $700 billion bank rescue plan. Asian stocks fell.

Britain's benchmark stock index, the FTSE 100, fell by as much as 3% in early trading, with particularly sharp declines in the banking sector. But the index of 102 companies then recovered, trading down only 0.15% at 4,811.33 by late morning.

Germany's benchmark DAX index fell nearly 1% to 5,756.87, while the Paris CAC-40 was barely down 0.20% at 3,946.00. Meanwhile, Russia's regulator was forced to halt regular trading in its two major markets on Tuesday morning after stocks plunged in the opening minute of trading.

In Ireland, the government guaranteed all the deposits and borrowings — worth around 500 billion euros ($717 billion) — of six of the country's major lenders. Ireland's ISEF Index of financial shares surged as much as 25% on the back of the guarantee, before settling to a rise of 12% by midmorning.

Some analysts were crediting Ireland's unprecedented move with helping to keep European stocks overall from falling nearly as much as stocks in the United States and Asia did.

"The Irish government's blanket insurance could form a template for a European approach to this crisis," said Rob Carnell, London-based chief international economist at ING Financial Markets.

Stocks plummeted across Asia in panic selling following the U.S. House's rejection of a $700 billion Wall Street bailout.

Japan's benchmark Nikkei 225 index nose-dived more than 544 points, or 4.6%, to 11,199.07, with popular stocks like Sony down 6.8% and Toyota Motor down 4.6%. by midday trading. It ended the day down 4.12%, its lowest level in more than three years. The Wall Street troubles reverberated across Europe too, with stocks turning volatile.

Hong Kong's Hang Seng Index plunged as much as 6% but recovered to end up 0.76%. In the South Korean capital Seoul, the Kospi index lost 3.5%. And in Singapore, the Straits Times Index fell nearly 3%.