Markets remained jittery amid Friday's political chaos surrounding the plan, which ran into major snags late Thursday. Rebelling conservative Republicans offered an alternative plan that includes insurance for toxic securities.

Meanwhile, the financial crisis claimed another big victim. In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual (WM) and struck a deal to sell the bulk of its operations to JPMorgan Chase (JPM).

In a brief statement Friday morning, President Bush said a financial rescue package, stalled by political posturing and public opposition, will be passed. He said "all legislators know something must be done." Later, Democratic Senators Harry Reid of Nevada and Christopher Dodd of Connecticut also said that a plan will be reached, but didn't say when.

On Friday, the blue-chip Dow Jones industrial average finished higher by 121.07 points, or 1.1%, to 11,143.13. The broader S&P 500 index gained 4.09 points, or 0.34%, to 1,213.27. The tech-heavy Nasdaq composite index shed 3.23 points, or 0.15%, to 2,183.34, paced by a sharp decline in Research in Motion (RIMM).

Activity in the broader market was negative. On the New York Stock Exchange, 21 stocks declined in price for every 10 that rose. The ratio on the Nasdaq was 16-12 negative. Trading was slow.

Bonds and gold futures were up in a flight to safety amid fears of recession if the plan is not enacted. The dollar index fell as second-quarter U.S. gross domestic product growth was revised down to 2.8% from 3.3% and a closely watched gauge of consumer sentiment fell in September. Oil futures were lower.

Markets around the globe fell amid the uncertainty in Washington. In London, the FTSE 100 index declined 2.09% to 5,088.47. In Paris, the CAC 40 index dropped 1.5% to 4,163.38. Germany's DAX index declined 1.77% to 6,063.50.

Japan's Nikkei 225 index declined 0.94% to finish at 11,893.16. In Hong Kong, the Hang Seng index was down 1.33% to end at 18,682.09. Shanghai's benchmark index edged lower by 0.16%.

Investors initially embraced news during Thursday's session that congressional leaders had reached a fundamental agreement on a financial sector rescue plan, with major stock indexes finishing sharply higher on the session.

But in Washington these days, nothing can be taken for granted.

Participants in a meeting late Thursday afternoon that President Bush had at the White House with congressional leaders and presidential candidates John McCain and Barack Obama said it descended into arguments.

Sen. Richard Shelby, an Alabama Republican, said on a CBS broadcast that many GOP lawmakers dislike the proposal that has been pushed on the administration's behalf principally by Paulson.

"Basically, I believe the Paulson proposal is badly structured," Shelby said. "It does nothing basically for the stressed mortgage payer. It does a lot for three or four or five banks ... "

Rep.