European stocks fell their second-worst single-session loss overnight as the focus of the world financial crisis moved across the Atlantic.

While US legislators were about to reject a $US700 million rescue plan for lenders, banking bailouts occurred in Belgium, Netherlands, UK, Germany and Iceland.

The governments of Belgium, Luxembourg and the Netherlands injected €11.2 billion of capital into Fortis, a Dutch-Belgian bank whose origins go back to the 1800s.

The lifeline came after France's BNP Paribas and Dutch financial firm ING walked away from talks to acquire the company over the weekend.

Fortis, which operates insurance and retail banking businesses throughout the Benelux region, will sell most of the ABN Amro assets it acquired for €24 billion last year.

In London, the government took control of mortgage lender Bradford & Bingley and will transfer its retail deposits business and branch network to Abbey National, owned by Spain's Banco Santander, for £612 billion. The UK Treasury will nationalise the rest of the business.

B&B’s stock price had fallen 28% in the past week, triggering a severe liquidity problem.

In Germany, property bank Hypo Real Estate Group was bailed out by the government and a group of private banks. They will provide a €35 billion rescue package in two tranches. Hypo had made heavy losses on US subprime-related investments.

In Iceland, the government bought a 75% stake in Glitnir, the country's third-largest lender, in a €600 million deal.

Financial stocks led the market decline. The pan-European Dow Jones Stoxx 600 index skidded 5.5% to 251.37, a three-year low; the U.K. FTSE 100 index dropped 5.3% to 4818.77; the German DAX 30 index dropped 4.2% to 5807.08; and the French CAC-40 index dropped 5% to 3953.48.

Irish financials were hard hit, Anglo Irish Bank shedding 46% and Irish Life & Permanent dropping 37.9%.

Meanwhile, in the US, Lehman Brothers agreed to sell its money-management units, including Neuberger Berman and its private-equity funds, to Bain Capital and Hellman & Friedman for $US2.15 billion.

Citigroup agreed to acquire Wachovia's banking operations for $US2.1 billion in stock and will assume another $US53 billion in Wachovia debt, in a deal orchestrated by federal officials.