World stocks down ahead of key Senate vote

LONDON -- World stock markets mostly fell Tuesday ahead of the unveiling of the U.S. Treasury's bank rescue plan and the Senate's expected approval of a massive stimulus package.

The $838 billion economic bill survived a key test vote in the Senate Monday, setting up a final vote Tuesday. The plan must then be reconciled with an $819 billion version from the House of Representatives.

After Wall Street closed Monday, President Barack Obama pressed his case for the stimulus plan, warning that failing to act swiftly and boldly "could turn a crisis into a catastrophe."

The FTSE 100 index of leading British shares dropped 25.39 points, or 0.6 percent, to 4,282.22, while Germany's DAX fell 35.29 points, or 0.8 percent, to 4,631.53. The CAC-40 index in France was 17.24 points, or 0.6 percent, lower at 3,117.63.

Wall Street futures indicated a modestly lower open. Dow futures were 12 points, or 0.2 percent, lower at 8,206, while the broader Standard & Poor's 500 index fell 2.50 points, or 0.3 percent, to 862.60.

Once the Senate passes the stimulus plan, Treasury Secretary Tim Geithner is expected to lay out his bank rescue plan. He has delayed his speech until the stimulus plan is passed.

The revamped bank rescue plan is expected to continue to rely heavily on capital injections into banks, although with more strings attached in terms of caps on executive compensation and enhanced monitoring to make sure banks use the money to increase lending.

The administration has said it will devote up to $100 billion of the remaining $350 billion of the government's $700 billion financial rescue program to preventing home foreclosures. The Bush administration, led by then-Treasury Secretary Henry Paulson, committed the first $350 billion of the program, leaving the final half for the Obama team to manage.

"People are waiting to see what happens in the U.S.," said Conita Hung, head of equity markets with Delta Asia Financial Group in Hong Kong. "People aren't going to inject a lot more money in the market with this kind of uncertainty."

Europe's markets were also hit by news that Swiss bank UBS AG lost 8.1 billion Swiss francs ($7.57 billion) in the fourth quarter and said it would cut another 2,000 jobs as it refocuses on its home market after a troubled year abroad.

Earlier in Asia, Japan's Nikkei 225 stock average fell 0.3 percent to 7,945.94, while Hong Kong's Hang Seng closed up 0.8 percent at 13,880.64 after swinging in and out of negative territory throughout the session.

South Korea's Kospi shed 0.3 percent to 1,198.87. Benchmarks in Australia, New Zealand, India the Philippines and Thailand also fell, while markets in Taiwan and Singapore rose.

In mainland China, Shanghai's key index -- which had surged about 12 percent over the last six trading days -- rebounded from the red to finish 1.8 percent higher. Chinese investors were encouraged by government data showing wholesale prices climbed in January compared with December, suggesting demand was rising.

Oil prices rose, with light, sweet crude for March delivery up $1.37 cents to $40.93 a barrel on the New York Mercantile Exchange. The contract fell 61 cents overnight to settle at $39.56.

In currencies, the dollar weakened 0.1 percent to 91.34 yen, while the euro fell 0.3 percent to $1.2982.