US markets wary over rescue deal

The markets remain nervous

US shares have fallen sharply with investors cautious over whether the House of Representatives will back the revised bank rescue plan.

The House is due to discuss the scheme later, with a vote expected on Friday. The bill successfully passed through the US Senate on Wednesday.

On Wall Street, the Dow Jones index was down 263 points or 2.4% at 10,571, a slide dragging European shares lower.

The falls came as France said it would host a summit on the financial crisis.

The UK’s FTSE 100 closed was down 1.8% to 4,870.3 points while Germany’s Dax index shed 2.5% and France’s Cac 40 lost 2.3%.

Sentiment was further hit by glum economic data – showing that the number of people filing for new unemployment benefit claims rose to a seven-year high, while factory orders had seen a steeper-than-expected drop in August.

European talks

The office of French President Nicolas Sarkozy said the special meeting on Saturday would discuss a co-ordinated response to the financial turmoil amongst European members of the G8 ahead of a meeting of world finance leaders in Washington next week.

UK Prime Minister Gordon Brown is due to attend, together with German Chancellor Angela Merkel, Italian Prime Minister Silvio Berlusconi and European Central Bank President Jean-Claude Trichet.

Investors are still concerned about the efficiency of this rescue plan and how it can help the global economy Aric Au, Phillip Securities

But with just two days to go before the talks start, EU members are deeply divided, correspondent said.

France and Holland favor a European response to help banks hit by the credit crisis while Germany and Luxembourg believe a joint rescue plan is not necessary.

European leaders have denied speculation that they wanted to establish a unified 300bn euro ($418.4bn; £236bn) banking rescue deal along the same lines as the US plan.

The rescue idea was said to be being proposed by France, but Mr Sarkozy insisted that there were no such plans.

“I deny both the amount and the principle [of such a plan],” he said.

‘Essential’

In the US, a number of changes had to be made to the $700bn (£380bn) bail-out plan in order to help win approval in the Senate.

These include raising the government’s guarantee on savings from $100,000 to $250,000, tax breaks to help small businesses, expansion of child tax credit, and help for victims of recent hurricanes.

President George W Bush said that the package was “essential to the financial security of every American”.

However, economists said doubts remained about how effective the package would be.

“Investors are still concerned about the efficiency of this rescue plan and how it can help the global economy,” said Aric Au of Phillip Securities in Hong Kong.

McCain and Obama

US presidential hopefuls John McCain and Barack Obama, who both returned from the campaign trail for last night’s Senate debate, voted in favor of the rescue plan.

Senate majority leader Harry Reid, a Democrat, said he was happy with the result and praised both presidential candidates for voting.

“I think it shows that when we work together we can accomplish good things,” he said.

Mitch McConnell, leader of Republican senators, was also in jubilant mood.

“This was a measure that was much needed, to unfreeze the credit markets and get America’s economy working again,” he said.

Federer edges through in thriller

Federer last lost at the US Open against David Nalbandian in 2003

Roger Federer came through a desperately tense five-set encounter with Igor Andreev to keep his bid for a fifth straight US Open title alive.

The champion showed the frailty that has dogged him all year as he was taken to a fifth set but raised his game to win 6-7 (5-7) 7-6 (7-5) 6-3 3-6 6-3.

Andreev took the first set and had seven break points at the start of the second but Federer managed to hang on.

He will face Gilles Muller of Luxembourg in the quarter-finals.

Muller, a qualifier, stunned Russian fifth seed Nikolay Davydenko 6-4 4-6 6-3 7-6 (12-10) in a dramatic match.

Federer had looked superb in his third-round win over Radek Stepanek, but his recent frailties were in evidence throughout against Andreev on Arthur Ashe Stadium.

He broke me so easily at the beginning and I was struggling to get in a groove from the baseline Roger Federer

He made 60 unforced errors and faced 15 break points, and his survival was largely due to the fact that Andreev converted just two of them.The Russian broke at the first attempt and should have taken the set from there, but he allowed Federer back in at 5-5 before edging the tie-break.

A nervous Federer then framed a smash to slip 15-40 down early in the second but Andreev failed to capitalize on five break points, and a further two in the next game.

Still the world number two struggled with his form, missing two set points in the second set tie-break before Andreev handed him the set with a wayward forehand.

That gave Federer a temporary boost and when he cracked away a cross-court forehand to break for 3-1 in the third, the game appeared up for Andreev.

But at the same stage in the fourth set Andreev benefited from a hugely fortuitous net cord and confidently served out to take it to a decider.

At last, Federer reminded everyone of why he has won 12 Grand Slams as he stepped up a gear, moving 3-0 clear after winning an epic rally to break.It was hardly downhill all the way after that as the Swiss fought off four break-back points at 4-2, but his fighting spirit saw him through to a meeting with Muller,the world number 130.

“He was playing well,” Federer said of Andreev. “He broke me so easily at the beginning and I was struggling to get in a groove from the baseline.

“The second set was key for me to get back in the match. I served well but it was a tough match.”

Davydenko could not cope with Muller’s serve-volleying and a barrage of 20 aces on Louis Armstrong Stadium.

Muller pulled out his best shots when it mattered, serving an ace to save a set point at 4-5 in the fourth set and saving another with a big serve at 6-7 down in the tie-break before getting a net-cord on match point.

“I think it’s not about that last point,” said Davydenko. “It’s about many points. I had so many chances.”

In the same half of the draw, third seed Novak Djokovic edged out Tommy Robredo 4-6 6-2 6-3 5-7 6-3.

The Serbian will play American Andy Roddick in the last eight after the 2003 champion thrashed Fernando Gonzalez 6-2 6-4 6-1.