Australian, NZ shares plunge after US bailout vote

Australian Prime Minister Kevin Rudd urged U.S. lawmakers to urgently return to negotiations to come up with a deal that will prevent further infection of world markets.

"This is a bad development," Rudd told reporters in Australia's capital, Canberra, of the news that the U.S. House of Representatives had defeated a US$700 billion rescue package for America's financial crisis.

Wall St. and other markets fell sharply after the vote Monday.

Australia's benchmark S&P/ASX-200 index fell more than 5.3 percent within half an hour of the opening of trading on Tuesday. By early afternoon, it had rebounded slightly and was down 3.7 percent.

New Zealand shares closed Tuesday down 3.1 percent after initially plunging 4.7 percent in early trading.

Analysts said falls could be expected across the Asia-Pacific region.

Rudd said Australia's banking system was better regulated than the U.S. system and was better prepared for financial shocks, but that the failure was another worrying sign in already tough times.

"The attitude that we will adopt, and I believe other friends and allies of the United States will adopt, is to urge the United States Congress to pass this or a similar measure when it is re-presented to the Congress later this week," he said.

Australia's Federal Treasurer Wayne Swan told reporters the credit crunch would put more pressure on local borrowing.