House of Representatives pass rescue deal on second attempt but financial markets remain subdued

The US stock market failed to rally on Friday despite the hoped-for approval of the government's $700bn (£394bn) financial rescue package.

The rescue package bill was finally passed in the House of Representatives on Friday after being rejected in an earlier form on Monday.

The Emergency Economic Stabilization Act passed by 263 votes to 171 after the Senate added about $100bn (£57bn) in tax breaks to win over Republican rebels.

The package is aimed at buying up the bad debts of US banks in order to stabilise the national economy and release it from the jaws of the credit crunch.

The debts will be bought up through an auction process overseen by the US Treasury, which will take place in about a month's time.

President Bush said that the bill was essential to help the US economy weather the financial crisis but acknowledged that there were concerns about the government's role in the deal and its cost.

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