U.S. Senate leaders plan to vote on the White House's US$700-billion bailout plan Wednesday, adding tax breaks and legislation that would raise federal deposit insurance limits to attract more votes.
Congress defeated the plan on Monday, stunning both Democratic and Republican leaders and sending North America's stock markets plummeting.
The new approach was unveiled by Senate Majority Leader Harry Reid (D-Nev.), and Minority Leader Mitch McConnell (R-Ky.). They said the added tax legislation would raise the deposit insurance limits to $250,000 from $100,000 -- a proposal already endorsed by Sen. Barack Obama and Sen. John McCain.
On Tuesday, the markets managed a slight rebound. Toronto's S&P/TSX composite index gained 467.83 points to close at 11,752.90, as crude oil prices rose $4.86 to US$101.23 a barrel.
BNN's Michael Hainsworth told CTV Newsnet that Tuesday's gains were mostly due to investors looking for a good deal after Monday's losses.
"Bargain hunting was one of the key reasons why we saw the markets in Toronto and New York regain ground," Hainsworth said.
The gains were significant but not enough to make up for Monday's record-setting losses.
The Toronto stock market closed yesterday with its worst-ever point drop, shedding almost 850 points or 7.5 per cent of its value.
In New York on Tuesday, the Dow Jones industrial average rose 485.21 points to close at 10,850.66 while the Nasdaq jumped 98.6 points to close at 2,082.33.
The gains still paled in comparison to that market's biggest-ever one-day drop when the Dow Jones fell 800 points, or 7 per cent.
Bush repeats urgent message
U.S. President George Bush urged Congress on Tuesday to pass the US$700 billion Wall Street rescue plan.
He said if the bailout plan is not passed, millions of Americans will be negatively impacted and the economic situation will grow worse each day.
"If our nation continues on this course the economic damage will be painful and damaging," Bush said before North American markets opened Tuesday.
"Our economy is depending on decisive action from the government, the sooner we address the problem the sooner we can get back on the path of growth and job creation."
In total, 228 House members voted against the deal Monday, compared to 205 who supported the bailout plan.
"This is a very unpopular measure in the United States," CTV's Tom Clark reported Tuesday from Washington. "A lot of these Congressmen are up for re-election in November. They want to be able to go back to their constituents and say 'I voted against this bill.'"
Global markets jittery
Asian stock markets fell Tuesday as nervous investors reacted to the rejection of the bailout plan.
Japan's benchmark Nikkei stock 225 index slumped 4.12 per cent to close at 11,259.86 -- the lowest level since June 2005.
In Australia, the S&P/ASX-200 index shed 4.3 per cent after falling as much as 5.3 per cent.
Despite the turmoil, many indices erased early losses as trading progressed. Hong Kong's market made a dramatic turnaround, closing slightly higher than Monday's finish.
Meanwhile, in Europe, markets were mixed on Tuesday.
Britain's benchmark stock index, the FTSE 100, was trading down only 0.15 per cent at 4,811.33 by late morning.
Germany's benchmark DAX index fell by nearly 1 per cent to 5,756.87, while the Paris CAC-40 was barely down 0.20 per cent at 3,946.00.
"The people in this country went to bed last night believing the rescue package would go through in Washington," CTV's Tom Kennedy reported Tuesday from London. "They woke up this morning with the shock of realizing that it did not go through."
Kennedy said European markets remain volatile but they're showing resilience.
"There's just a huge question mark here... about what's going to happen in the U.S.," he said.
With files from The Associated Press
