LONDON European markets fell after Asian market finished higher Monday as talks continued on a proposed $700 billion U.S. plan to ease the world financial crisis by rescuing banks from billions of dollars in risky mortgage debt.
In Asia, Japan's Nikkei 225 index rose 1.42 percent, and Hong Kong's Hang Seng Index rose 1.58 percent. But in later trading in Europe, London's FTSE fell 1.41 percent, Germany's DAX declined 1.32 percent and France's CAC 40 fell 2.34 percent.
"There was massive reaction on Friday, today there is an element of profit-taking and a bit of reality of people worrying about the world economy as we see the price of oil move higher again," said Stephen Pope, chief global markets strategist for Cantor Fitzgerald.
"As the week develops there should be some concrete proposals coming through," he added.
The Group of Seven, an organization of the world's leading economic powers, pledged Monday to do all it could to help ease the crisis. The group said in a conference call that it welcomed the extraordinary steps the United States has taken so far. The group didn't offer specifics about what actions it might take. But it sought to send a reassuring message that they are on top of the situation.
But prices fell on Wall Street where investors grew nervous about the mortgage debt buyback plan. The Dow Jones industrials were down more than 250 points at midafternoon and investors sought safety in hard assets such as gold and oil, which at one point shot up more than $25 a barrel.
The Dow had risen about 780 points over two days to end last week as reports spread about the bailout proposal.
On Monday, the Nikkei 225 index climbed 1.4 percent to close at 12,090.59 points in Japan, while Hong Kong's Hang Seng Index rose 1.6 percent to 19,632.20.
In China, the Shanghai Composite Index soared 7.8 percent on hopes of a turnaround after government steps to stabilize the country's beaten down shares. Markets in Australia and Taiwan advanced strongly after their regulators issued curbs on short selling, following similar moves in the U.S., Britain and other countries. The practice, which bets on a stock's decline, has been partly blamed for driving down share prices.
Global markets had rallied Friday on news Washington was likely to enact a bailout plan, calming investors worried that losses from bad bets on mortgages could bring about the collapse of more companies, straining an already weakened financial system and global economy.
As a rough outline of the plan took shape over the weekend, the Bush administration continued to lobby lawmakers Sunday for authority to use $700 billion to buy up a mountain of bad debt at the heart of the crisis.
While the proposed bailout lifted sentiment for the time being, there were still a number of uncertainties about the plan and the general health of financial firms that could further unsettle markets in the coming days, an analyst said.
"This should stem the bleeding, but the patient is still very fragile," said Thomas Lam, a senior economist at the United Overseas Bank in Singapore. "The list of uncertainties is pretty long."
Meanwhile, cash demand showed some signs of easing as European central banks offered more liquidity to money markets.
According to the Bank of England, it offered $40 billion in a one-day tender, for which the bank said it received $26 billion in bids, but didn't indicate from how many banks.
But the European Central Bank said it received bids worth $82.1 billion for the $40 billion it offered in a one-day transaction, or more than double what it had offered.
Japan's central bank pumped another 1.5 trillion yen ($14.1 billion) into short-term money markets, the ninth injection over five straight working days.
Monday's moves come after central banks in Britain, Canada, the United States, Japan and Canada last week supplied cash to banks that had become wary of lending to one another in the aftermath of the bailout of AIG and the bankruptcy of Lehman Brothers. Banks have been increasingly reluctant to lend to each other as distrust spread throughout the financial system.
Financial stocks, battered in recent weeks, were among leaders in Asia.
Japanese banking giant Mitsubishi UFJ Financial Group Inc. shot up more than 5.2 percent, while leading Australian firm Macquarie Group Ltd. climbed 5.3 percent. In Hong Kong, Industrial & Commercial Bank of China, the country's biggest, was up 2.4 percent.
In mainland China, share prices surged on strong buying of financial shares after the government announced plans to buy shares in major state-owned banks and other measures.
Elsewhere, Australia's &P/ASX 200 index jumped 4.5 percent and Taiwan's benchmark rose 2.3 percent.
In Russia, stocks inched up following big gains for all indexes last week, with the U.S. dollar-denominated RTS adding 1.6 percent.
AP Business Writers Jeremiah Marquez in Hong Kong and Elaine Kurtenbach in Shanghai contributed to this report.