World seeks US action over crisis

Washington: World leaders called on the US government to take action to stave off global financial collapse on Tuesday after Congress rejected a $700 billion bailout in a move that stunned global markets.

Another European bank, Dexia, had to be rescued and shares went through another roller coaster ride after the House of Representatives voted 228-205 against the rescue on Monday.

European leaders led the calls for action by President George W. Bush, who pursued his blitz on behalf of an economic rescue package yesterday, a thus-far failed effort showing his political weakness five weeks before voters choose his successor.

"He has no political capital. If the banks have no capital, then neither does George W. Bush. And I don't think there's a rescue plan for him," said Eric Davis, a political scientist at Middlebury College in Vermont.

"The US must take its responsibilities in this situation, must show statesmanship for the sake of their own companies and for the sake of the world," European Commission spokes-man Johannes Laitenberger said.

German Chancellor Ang-ela Merkel called for another vote on the plan this week to restore market confidence.

British Prime Minister Gordon Brown said he had sent a message to the White House to underline "the importance that we attach to taking decisive action".

New Japanese premier Taro Aso said: "We should not let the world financial system collapse."

Australian Prime Minister Kevin Rudd said that he and other US allies would press Washington to take action.

The calls came as bank rescues spread in Europe yesterday. Wall Street stocks opened higher, a day after the US House of Representatives rejected the rescue plan and sent markets into a spin.

Paulson promise

"There's an overarching belief that at some point this week, whether it's Wednesday or Thursday, we'll get something passed by the House," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.

US Treasury Secretary Henry Paulson said he would continue to work with Congress to formulate a bill that could pass. The bill rejected on Monday was crafted by Paulson and Federal Reserve Chairman Ben Bernanke in negotiations with congressional leaders.

US presidential candidates Barack Obama and John McCain both said Congress must pass the bailout plan, which now dominates the run-up to the November 4 election.