By Daniel Trotta and Richard Cowan
Result of vote scheduled for 7:30pm Eastern Daylight Time, President Bush says he is confident.
World markets braced for a US Senate vote on Wednesday over a proposed $700 billion bailout seen as crucial to reviving paralyzed credit markets while European powers squabbled over their own version of a rescue.US President George W. Bush said he was confident the Senate would pass the bill with a vote due for some time after 7:30 p.m. EDT (2330 GMT). Passage would set the stage for a second vote in the House of Representatives, probably on Friday.
A slack-jawed financial world came to a halt on Monday while watching the House reject a previous version of the bill, sending global markets into tailspin after weekend negotiations on Capitol Hill had been expected to ensure passage.
Central bankers and pensioners worldwide were counting on the rescue plan to empower the US Treasury to buy distressed assets from financial firms staggering under the weight of failed mortgages, intending to clean up their balance sheets and jump-start lending.
Congressional leaders added two sweeteners to the bill - a tax cut and extended federal protection for bank deposits - with the expectation it would sail through the Senate and then return to the House for an up-or-down vote.
The White House and European policy makers called the measure crucial to world financial health with recessionary signals mounting in the world's largest economy and the credit crisis reverberating among European banks.
US factory activity shrank in September to its lowest since the 2001 recession and major automakers reported plunging US sales for September, led by a 34 percent slide at Ford Motor Co.
In Europe, France and Germany clashed over the idea of a US-style financial rescue fund for Europe amid further signs of contagion from the global credit crisis.
Italy's UniCredit became the latest bank under scrutiny after backing away from its 2008 earnings targets.
The US vote would cap another whirlwind day in the markets in which shares of bellwether US conglomerate General Electric Co plunged as much as 9 percent on concerns about future earnings until super-investor Warren Buffett took a $3 billion stake.
It marked the second time in eight days Buffett came to the rescue of a corporate giant. One of America's most famous investors and among the richest men in the world, Buffett said last week he would invest $5 billion in Goldman Sachs Group Inc.
The S&P 500 closed down 0.45 percent, suggesting equity investors expected the bailout to pass, but they had also expected the House to approve the plan on Monday.
With all 435 members of the House and 35 of 100 Senators up for reelection on Nov. 4, politicians were fearful of voter backlash against a plan widely seen as a taxpayer bailout of Wall Street's errors.
Voter sentiment may have changed since Monday's rejection of the rescue plan by the House led to a 777-point plunge on the Dow, wiping billions of dollars off the value of retirement funds and personal wealth.
The presidential candidates, Republican John McCain and Democrat Barack Obama, left the campaign trail for Washington where they would cast their votes as senators, both saying failure to pass the bill would have dire consequences.
Meanwhile, economists kept close watch on interbank interest rates, a measure of credit liquidity that is vital to fueling global economic activity. Global money markets remained largely impaired on Wednesday, with banks wary of lending to each other -- as they have been since the bankruptcy of Lehman Brothers and nationalization of other major financial institutions in the United States and Europe.
Buffett addressed voter concerns about the bailout, calling it necessary to unfreeze credit and reinvigorate interbank lending.
"There's no question this is a rescue plan, but it's a rescue plan for the American economy, not for Wall Street," Buffett told CNBC television.
"This is designed to help the American economy from going into the ultimate tailspin... This is an economic Pearl Harbor. And the whole world wants to deleverage. The only entity in the world that can leverage up to match that force is the US Treasury," said Buffett, an Obama supporter.
Lobbyists from the banking industry and the US Chamber of Commerce were trying to identify House members who might reconsider their Monday "no" votes, and business executives around the world warned that the crisis would hit growth.
After Wall Street giants Bear Stearns, Lehman Brothers and Merrill Lynch were swallowed by rivals and with commercial banks teetering or collapsing, European banks have undergone their own tumult.
Lloyds TSB Group Plc was poised to take over British rival HBOS Plc, potentially at a cut-rate price.
This came after the Dutch-Belgian bank Fortis was partially nationalized through an 11 billion euro bailout on Sunday. JP Morgan Securities forecast more pretax write-downs to come. (Reuters)