By Eddie Evans and Ralph Boulton

The fate of the rescue plan, passed by the Senate 74-25 on Wednesday night, now lies with the House of Representatives, which is expected to vote on the bill on Friday.

The House rocked global markets on Monday by rejecting an earlier version of the bailout, which President George W. Bush has called the "essential to the financial security of every American."

The European Central Bank left interest rates steady but its president, Jean Claude Trichet, said inflation risks had diminished, which markets took as a signal of possible future cuts. Economic activity in the euro zone is weakening, he said.

The crisis has spread well beyond U.S. shores and beyond the financial sector. Top automakers including General Motors Corp and Ford Motor Co warned of tough times, as evaporating credit for consumers cuts demand and could force production cuts and job losses.

"The problems of subprime and credit crunch are now all over the world," Ford Chief Executive Alan Mulally said. "The downturn is longer and deeper than we foresaw a year ago," he said.

U.S. figures show falling factory output and plunging car sales, a sign of increasing reluctance of banks to give loans to business or individuals.

Jobless claims rose in the United States last week to their highest level in seven years, ahead of September payrolls data due out on Friday.

Oil prices were down $3 a barrel on an expected slowdown in economic activity around the world, major U.S. stock indexes fell more than 1 percent and the dollar rose to a year high against the euro.

In a week marred by bank rescues across Europe, French President Nicolas Sarkozy's office said he would host the leaders of Britain, Italy, Germany and the European Central Bank on Saturday to discuss a response to the credit crisis. Sarkozy denied reports a 300 billion euro ($415 billion) plan akin to the U.S. bailout was under consideration.

Market participants remained cautious about the U.S. bailout bill's prospects in the House.

"I'm not betting anything here because I don't know what the House is going to do," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "If this bill doesn't pass in the House, it's game over."

Even if the bill is passed, worries remain over the global economic outlook, said Masamichi Adachi, senior economist at JPMorgan in Tokyo. "It's a completely different world now. All the things U.S. authorities are doing now are simply aimed at preventing a global meltdown."

The bailout plan, equivalent to some $2,300 per American, is intended to reinvigorate credit markets and interbank lending that has frozen up while overleveraged financial institutions staggered under the weight of failed mortgages.

It has stirred fierce criticism from those who see it as help for a Wall Street guilty of taking reckless risks in pursuit of short-term profit.

Under the deal, the Treasury would take on illiquid assets held by banks, in the hope of restoring confidence and unfreezing credit markets vital to the wider economy.

Asian stocks drifted lower on fears of recession. The FTSEurofirst 300 index of top European shares rose 0.5 percent.

Interbank lending rates remained high, a sign that banks were not lending to each other, despite the Senate vote and large injections of cash by central banks.

President Bush, his authority eroded by the approaching end of his term in office, welcomed Senate passage of the package and urged the House to quickly do the same when it votes, probably on Friday.

"With the improvements the Senate has made, I believe members of both parties in the House can support this legislation," Bush said in a written statement.

HOUSE PASSAGE SEEN MORE LIKELY

Senate leaders hope that sweetening the plan with a tax cut and extended federal protection for bank deposits can turn "no" voters in the House into supporters. On Monday, the House rejected the previous version of the plan by a 228-205 vote.

"It's still uncertain. I think it is likelier to pass than before," House Financial Services Committee Chairman Barney Frank said in an interview on CNN.

"The main change is reality. I think that it's not possible now to scoff at the predictions of doom if we don't do anything," the Massachusetts Democrat added.

Many Americans resent the idea that Wall Street is being "bailed out" at taxpayer expense, and have made their views clear in e-mails and calls to Washington, putting pressure in particular on vulnerable members of the House.

The crisis has become the biggest issue in forthcoming U.S. elections. Both presidential candidates, Republican Sen. John McCain and Democratic Sen. Barack Obama, voted for the package. Obama, echoing Republican Bush's warnings, said the bailout was vital to "prevent a crisis turning into a catastrophe."

All 435 House seats will be contested in the election on November 4, as opposed to 35 seats up for grabs in the Senate.

But Britain's Nationwide building society said house prices in August were 12.4 percent lower than a year earlier, their highest annual drop since records began in 1991. The country's biggest retail chain Marks and Spencer posted a 6 percent drop in second-quarter core sales and said it was cutting investment.

Treasury Secretary Henry Paulson, whose original three-page proposal grew to hundreds of pages when Congress got involved, urged the House to act swiftly to ratify it.

Should the House approve the bill, it would go to Bush to be signed into law.

"This sends a positive signal that we stand ready to protect the U.S. economy by making sure that Americans have access to the credit that is needed to create jobs and keep businesses going," Paulson said.

"If the massive expansion of the Fed's balance sheet and other CB (central bank) liquidity injections cannot do the trick then coordinated global rate cuts becomes likely and necessary," Michael Hartnett, chief emerging markets equity strategist at Merrill Lynch, wrote in a note.

The tally for all the various rescue measures launched by U.S. authorities this year runs to about $1.8 trillion -- more than the total economic output of both Canada and Spain last year.

(Additional reporting by Reuters reporters in New York, London, Paris, Brussels, Hong Kong and Tokyo; Editing by Tom Hals)