Bush says U.S. bailout deal near

By Tom Ferraro and Richard Cowan

WASHINGTON (Reuters) - U.S. lawmakers appeared close to a final agreement on Thursday on a massive $700 (377 billion pound) billion bailout to save the financial system, lifting world stock markets and sending the dollar higher.

News that a deal was near stabilized beleaguered money markets, frozen by a reluctance by banks to lend. The rate on one-month U.S. Treasury bills shot higher as traders unwound safe-haven trades.

Still, officials from France to China voiced alarm.

"A crisis of confidence without precedent is shaking the global economy," French President Nicolas Sarkozy said in a speech in Toulon, France.

The apparent breakthrough on a $700 billion rescue plan came ahead of an emergency meeting with U.S. President George W. Bush, including the two men battling to succeed him, Democrat Barack Obama and Republican John McCain as well as Congressional leaders.

As that meeting began, Bush told reporters, "We're in a serious economic crisis in the country if we don't pass a piece of legislation."

"My hope is that we can reach an agreement (on a bailout) very shortly," he said.

Earlier, U.S. Sen. Christopher Dodd, chairman of the Senate Banking Committee, said House of Representatives and Senate negotiators had reached "fundamental agreement" on a set of principles guiding a bailout bill.