U.S. bailout plan progress helps stocks and dollar

By Kevin Plumberg

NEW YORK (Reuters) - Asian stocks and the U.S. dollar rose on Monday after Washington lawmakers prepared to vote on a plan to save the financial system from ruin, but a large European bank failure left investors' nerves raw.

The proposal to establish a $700 billion fund to buy illiquid securities will be sent to Congress later on Monday, though instability in the bank industry has spread across the Atlantic, with the Belgian, Dutch and Luxembourg governments forced to rescue financial firm Fortis (FOR.BR) over the weekend.

In addition, the British government will take over mortgage lender Bradford & Bingley BB.L, people in the bank industry familiar with the matter told Reuters, sending the pound and the euro lower across the board.

"Markets are likely to take a cautiously positive tone to the plan and the much greater prospect of passage through Congress," Calyon analysts said in a note.

"Nonetheless, there remain many questions about agreeing valuations on toxic assets as well as many other operational issues. Any easing in risk aversion could be limited until its effectiveness becomes clearer," they said.

The euro fell 0.2 percent to $1.4495, down almost 4 cents from a one-month high hit a week ago.

Sterling dropped 0.6 percent to $1.8275 after touching a one-month high on Thursday.

The dollar rose 0.5 percent to 106.78 yen.