American shares fell 350 points today as sceptical investors waited to see if the House of Representatives will vote through the reworked $700 billion (£398 billion) bailout plan after it was passed by the US Senate last night.

US House of Representatives speaker, Nancy Pelosi, said that she would not schedule a vote on the bailout bill unless she had enough votes for passage.

The Dow Jones industrial average retreated by 348.2 points to 10,482.9 after traders were also spooked by new data showing the number of people claiming jobless benefit is at a seven-year high and a sharp fall in factory orders.

In London, the FTSE 100 index of leading stocks slid into negative territory, losing 89.3 points to 4,870.34.

Last night, the US Senate voted 74-25 in favour of the amended $700 billion rescue plan that will buy banks' toxic assets to help restore confidence to the domestic and global financial markets and stave off a recession.

The House of Representatives, which dramatically threw out the first version of the bill on Monday, is expected to vote again tomorrow. However, while the US Senate voted in favour, there is no guarantee the House will follow suit.

The new bill contains more than $100 billion of tax breaks, including relief for businesses — popular with Republicans — and help for more than 20 million middle-class taxpayers to avoid higher levies under the alternative minimum tax.

To calm voter fears of bank collapses, the Senate plan would also increase federal insurance for deposit accounts, from $100,000 to $250,000, a move backed by US Presidential hopefuls, John McCain and Barack Obama.

The US Labour Department revealed today that claims for unemployment benefits rose by 1,000 last week to a 497,000 unnerved investors, suggesting that problems in the financial system were spreading into other areas of the economy.

Analysts had expected unemployment claims would fall to 475,000 but, instead, the level is the highest seen since the September 11, 2001.

At the same time, orders to US factories decreased in August by the most in almost two years. The 4 per cent drop in bookings was larger than forecast and followed a revised 0.7 per cent increase in July.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts