US Senate approves new version of $700bn bailout plan

Earlier this morning the US Senate voted in favour of a new version of the $700 billion (£380 billion) bailout plan.

Senators voted 74 to 25 in favour of the emergency legislation established to prevent further damage to the US financial system.

The new approved version includes sweeteners such as tax breaks for families and businesses, as well as raising the amount of savings guarantee from $100,000 to $250,000, which has been designed to win the approval of doubters.

The scheme will now go back to the House of Representatives tomorrow, which narrowly rejected a similar bill earlier this week.

News of the vote had little impact on the Asian markets after Japan’s main Nikkei index was down by 1.2% in afternoon trading in Tokyo, while Australian stocks had lost only 1%.

Meanwhile, pressure is being piled on to Prime Minister Gordon Brown from French President Sarkozy, who is seeking the support of European leaders for a €300 billion (£237 billion) bailout fund to rescue struggling banks throughout Europe.

An emergency summit is being scheduled tentatively for Saturday, with Silvio Berlusconi, the Italian Prime Minister, and Angela Merkel, the German Chancellor.

Sarkozy’s plan has been met with doubt in Britain and hostility in Germany. It is understood that it will involve the creation of a Europe-wide emergency fund that would be used to support banks when national governments are unable to intervene.

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