Global stocks dive as rescue talks fail
Japan's Nikkei index tumbles 5.6% after U.S. auto bailout collapses in Senate. Hong Kong plunges 5.2%.
LONDON (CNNMoney.com) -- Stock markets around the world tumbled Friday after talks over a $14 billion bailout for the U.S. auto industry collapsed in the Senate.
Negotiations to bring the measure up for vote fell apart Thursday night, possibly dooming General Motors (GM, Fortune 500) and Chrysler to bankruptcy.
Asian shares finished the session sharply lower. Japan's Nikkei index sank 5.6% and the Hang Seng index in Hong Kong plunged 5.1%. South Korea's KOSPI shed 4.3%.
European shares were solidly in negative territory during mid-day trading. Britain's FTSE 100 was down 3.9%, the CAC-40 in France was off 5.32% and Germany's DAX was 4.57% lower.
U.S. futures, which give an indication of how Wall Street will open when trading begins in New York, were sharply lower.
The Senate voted 52-35 to bring the bailout for a vote, but that was short of the 60 votes needed to advance the legislation.
The failure followed the collapse of negotiations between Senate Democrats and Republicans seeking a compromise that all sides could accept. (Full story)
The bill would have provided $14 billion in federal loans as a stopgap measure until the new Congress and the incoming Obama administration could reach a longer-term solution for Detroit's crisis.
GM and Chrysler possibly face bankruptcy. Ford Motor (F, Fortune 500) has more cash on hand to avoid an immediate crisis, but its production could be disrupted by problems in the supplier base.
That could have ripple effects on the production of overseas automakers with U.S. plants such as Toyota Motor (TM) and Honda Motor (HMC).
U.S. stocks slumped Thursday on worries that the auto rescue bill wouldn't pass in the Senate.
The Dow Jones industrial average lost 196 points, or 2.2%. The Standard & Poor's 500 index lost 2.9% and the Nasdaq composite lost 3.7%.
After the close, Bank of America said it will cut up to 35,000 jobs over the next three years due to its purchase of Merrill Lynch and the weak economy. 
