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Even before the opening bell, Monday looked ugly.

But by the time that bell sounded again on the New York Stock Exchange, seven and a half frantic hours later, $1.2 trillion had vanished from the U.S. stock market.

What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into Wall Street’s blackest day since the 1987 crash. The broad market plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average tumbled nearly 778 points to 10,365.45.

Across Wall Street, no one could quite believe what was happening on the floor — the floor of the House of Representatives, not the stock exchange.

As lawmakers began to vote on a $700 billion rescue for financial institutions, the trading desk at Voyageur Asset Management in Chicago went silent. Money managers gaped at a television screen carrying news that seemed unthinkable: The bill was not going to pass. Shortly after 1:30 p.m., the rescue was rejected.

“You just felt like the world was unraveling,” Ryan Larson, the firm’s senior equity trader, said. “People started to sell and they sold hard. It didn’t matter what you had — you sold.”

Frustration, and then panic, coursed through the markets. Investors feared the decision in Washington would imperil the financial industry, as well as the broader economy.

At the Federal Reserve and other central banks, policymakers were also anxious. Even before the vote on Capitol Hill, central bankers tried to jump-start the credit markets by offering hundreds of billions of dollars in loans to banks around the world. But the neither the stock nor the credit markets appeared to respond. Just 24 hours earlier, few imagined Monday would play out this way.

On Sunday afternoon, the secretary of the Treasury, Henry M. Paulson Jr., and the speaker of the House, Nancy Pelosi, announced that they had agreed on the terms of a bailout.

But while congressional aides and lawmakers worked on the details, the credit crisis that began more than a year ago in the American mortgage market was setting off new alarms in Europe.

Shortly before 6 p.m. New York time on Sunday, Belgium, the Netherlands and Luxembourg agreed to invest $16.2 billion to rescue a big bank, Fortis. A few hours later, the German government and a group of banks pledged $43 billion to save Hypo Real Estate, a commercial property lender. At 2:50 a.m., news came that the British Treasury had seized the lender Bradford & Bingley and sold the bulk of it to a Spanish bank.

“We will continue to do what is necessary,” a somber Gordon Brown, the British prime minister, told reporters at 10 Downing St. in London. “The stability of the system comes first. We need a stable financial system.”

In Tokyo, where stocks had opened higher in early trading on Monday, worries quickly set in. Traders returned from lunch to reports suggesting the financial crisis was taking a toll on the global economy. Markets across Asia began to sell off.

In Tokyo, the Nikkei 225 sank 1.5 percent. In India, stocks fell nearly 4 percent. In Hong Kong, where a big bank, HSBC, raised key lending rates because of the turmoil in the credit markets, the Hang Seng Index tumbled nearly 4.3 percent.

As the drama unfolded in Asia, a major American bank was in trouble.

Regulators in Washington were rushing to broker the sale of Wachovia Corp., the nation’s fourth-largest commercial bank, to Citigroup or Wells Fargo.

At about 4 a.m., Sheila Bair, the chairman of the Federal Deposit Insurance Corp., called executives at Citigroup to say Wachovia was theirs.

But by this time, stocks were tumbling in European trading as investors reacted to the failure of Bradford & Bingley in Britain and the government support of Fortis and Hypo.

As investors in New York were getting up, the credit markets were again flashing red as banks reported higher borrowing costs. Investors continued to seek safety in Treasuries, driving up the 10-year note up 2-9/32, to 103-15/32, and the yield, which moves in the opposite direction from the price, to 3.58 percent from 3.85 percent late Friday.

When trading opened on the New York Stock Exchange at 9:30, stocks immediately fell 1 percent.

Noting the stress in the money markets, the Fed announced at 10 a.m. that it would increase to $620 billion its program to lend money through foreign central banks, up from $290 billion. The central bank also said it would double the amount of money it lends out domestically through an auction program to $300 billion.

Many eyes on Wall Street turned to National City, the Cleveland-based bank, which has a $20 billion portfolio of troubled loans it is trying to sell. National City’s shares plummeted 50 percent to $1.50 in early trading, prompting Peter E. Raskind, the bank’s chief executive, to assert that the bank was sound.

“Clearly we have had days and weeks that have been more fun,” Raskind said in an interview. “It’s not overly dramatic to say that investors are panicking. You can see it in the market and we can feel it.”

In New York, a group of 10 executives at Bessemer Trust huddled to discuss the markets and a question came up: What would it take to restore confidence to the credit markets? There were few upbeat answers, though one member of the group said the Citigroup takeover of Wachovia was a creative solution that could pave the way for more consolidation in the banking industry.

“It is the type of solution that makes good sense in these challenging times,” Marc Stern, the firm’s chief investment officer, said as he recounted the meeting.

But Stern and his group would soon be dismayed by what was happening in Washington.

At 1:30 p.m. the House began to vote on the rescue package that Paulson and congressional leaders negotiated over the weekend. The vote was carried live not only on C-SPAN but also on CNBC, CNN and other networks. About 15 minutes later, when it became clear that the legislation was in trouble, the selling picked up in the stock market.

At his home office in Great Neck, N.Y., Edward Yardeni, the investment strategist, received a series of terse e-mail messages from clients and friends. “Is this the end of the world?” one asked. Another sent a simple plea: “Stop the world, I want to get off.”