Bailout pressure mounts as WaMu closure chills

By Jason Szep and Jason Neely

NEW YORK/LONDON (Reuters) - Pressure mounted on lawmakers on Friday to agree on a $700 billion financial rescue plan after talks at the White House broke down in acrimony and the biggest bank closure in U.S. history roiled global markets.

U.S. authorities shut bank Washington Mutual Inc on Thursday, selling its assets to JPMorgan Chase & Co (JPM.N: Quote). In Europe, Belgian-Dutch financial group Fortis NV (FOR.BR: Quote)(FOR.AS: Quote) denied it had a liquidity problem after its shares tumbled for a fifth straight day.

Fallout from the crisis battered shares of Wachovia Corp WB.N, the sixth-biggest U.S. bank, which fell 16 percent before the bell, while KeyCorp (KEY.N: Quote), a large Midwest bank, slid more than 7 percent.

New data showed U.S. economic growth was not as strong as previously thought in the second quarter as consumers boosted spending less vigorously and businesses trimmed investments, a sign confidence was sagging even before financial market turmoil deepened.

U.S. Stock futures extended losses after the government report.

Europe's biggest bank, HSBC Holdings Plc (HSBA.L: Quote), said it was cutting 1,100 jobs, or 4 percent of its work force, citing the crisis.

Global money markets dried up, forcing increased injections of cash from central banks as dollar borrowing rates remained high, particularly for three-month money. The market stress was aggravated by the looming quarter-end next week.

As Washington's efforts to contain the credit crisis descended into angry clashes between Republicans and Democrats, the dollar and Asian and European share markets fell, Treasuries rose.