Stock markets were sent into free-fall yesterday as the US Congress rejected proposals for a $750bn bailout of the countries collapsed financial system.

The US Governments proposal would have seen the record sum pumped into financial institutions to help keep the US economy afloat after a series of high-profile collapses, including Bear Stearns, Fannie Mae, Freddie Mac and IndyMac.

The defeat of the bill sent stocks plummeting, with the Dow Jones closing 770 points down (6.9%) – a record points drop in a single trading day.