Turkish stocks fall on US bailout plan doubts and oil price rise

The main Istanbul stock exchange index traded 2.02 percent lower as the lira held steady against the United States dollar to Monday's close at 1.2390. The yield on the April 14, 2010 benchmark bond rose over 19 percent.

Oil prices surged on Monday, with U.S. light crude oil for October delivery briefly spiking more than $25 a barrel to hit $130 before pulling back to settle at $120.92, a gain of $16.37 - the biggest one-day dollar gain ever.

The contract for October delivery then eased to just below $109 in Asian trade on Tuesday.  Â

Oil prices had been plummeting since peaking at $147.27 a barrel on July 11, as investors bet that sluggish global growth would diminish oil demand.

A sharp fall in the dollar added to oil's gains. The dollar tumbled versus other major currencies. Gold prices jumped more than $44 an ounce as investors looked for safer assets than stocks and on concerns about the inflationary aspects of the bailout plan.

The Dow Jones industrial average dropped 3.27 percent, the Standard & Poor's 500 Index slid 3.82 percent, as the Nasdaq Composite Index fell 4.17 percent.

Monday's market swoon wiped out nearly all the gains seen on Friday when the bailout announcement sparked Wall Street's best one-day advance since 1987.

Investors cited uncertainties about the rescue plan's details and concern about whether it would provide a lift for the U.S. economy, which many fear is already in recession.

"Here it is Monday and people are waking up from a gigantic hangover, trying to figure out what's next," John Schloegel, vice president of investment strategies for Capital Cities Asset Management in Austin, Texas told Reuters.

Asian stocks also fell, snapping a two-day rally. Hong Kong shares were down 2.7 percent in morning trade as investors cashed in after the market had rebounded more than 20 percent since Thursday.

Australian share prices shed 1.9 percent in morning trade on worries about the rescue plan, while China’s benchmark index fell almost one percent. Singapore shares slid 1.84 percent in early trade, while South Korea traded flat after the KOSPI index had underperformed Monday.

Japan’s financial markets were closed Tuesday for a public holiday.

"The bailout gave the U.S. financial system a cardiac jolt that will prevent it from collapsing, but the economy is still in intensive care," Prasad Patkar, at Platypus Asset Management in Sydney, told Bloomberg.

The Bush administration is pressing Congress to approve one of the costliest U.S. bailouts for financial companies since the Great Depression, but debate about the particulars of the plan continues on Capitol Hill.