In a moment of historic drama in the Capitol and on Wall Street, the House of Representatives voted 228-205 to reject a $700 billion rescue of the financial industry.

Stock markets across Asia have fallen sharply, with some losing 3% of their value, after a US financial rescue plan failed to gain Congressional backing.

Japan's main Nikkei index was down 3% in afternoon trading. It came after the US Dow Jones index saw its biggest one-day points fall, dropping nearly 7%. US Treasury Secretary Henry Paulson said it was vital to get a new deal.

The markets began to plummet even before the 15-minute voting period expired on the House floor. For 25 more minutes, uncertainty gripped the nation as television showed party leaders trying, and failing, to muster more support. Finally, Representative Ellen Tauscher, Democrat of California, pounded the gavel and it was done.

In the end, only 65 Republicans — just one-third of those voting — backed the plan despite personal pleas from President Bush and encouragement from their presidential nominee, Senator John McCain. By contrast, 140 Democrats, or 60 percent, voted in favor, many after voicing grave misgivings. Their nominee, Senator Barack Obama, also backed the bill.

But the president has been wholly ineffectual in the crisis so far and it's difficult to see how that might change, says the BBC's North America correspondent Justin Webb.
Congress will not meet again until Thursday, with another vote unlikely before the weekend, the BBC's Jonathan Beale in Washington says.
The House's rejection of the bail-out plan came after a day of turmoil in the US and Europe, with Wachovia, the fourth-largest US bank, being bought by larger rival Citigroup.
In Europe, Benelux banking giant Fortis being partially nationalised by three governments, and the UK lender Bradford & Bingley taken into state ownership.