NEW YORK: Architects of a $700 billion bailout for US financial companies urged the US Congress to act swiftly or face dire economic consequences, while Japan's largest brokerage agreed to buy Lehman Brothers' European arm in the latest step in the industry's dramatic transformation.

Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson said the best chance for stabilising markets in serious stress was for the government to buy up hundreds of billions of dollars of tainted mortgage-related securities.

President George Bush used his farewell speech to the United Nations to offer assurances that markets would be stabilised but faced criticism over the excesses of a global free enterprise system that Washington has long pushed.

"Action by Congress is urgently required to stabilise the situation and avert what could otherwise be very serious consequences for our financial markets and our economy," Bernanke told the Senate Banking Committee.

Paulson said market turmoil was already spilling into the broader US economy. "We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil," he said.

US, European and Asian stock markets declined on uncertainty over what price the government will pay for the securities, when the buying will begin, and how confidence in the US financial system can be restored.

But some analysts were optimistic.

"It does seem like both sides are coming together and want to get a deal done quickly that will inject a lot of capital into the economy and free up lending," said Marc Pado, US market strategist at Cantor Fitzgerald in San Francisco.

Lawmakers have vowed to move quickly on what would be the largest government bailout in American history, but are insisting on changes - including more protections for taxpayers and limits on compensation for executives of firms that unload bad assets onto the government.

Meanwhile, Nomura Holdings agreed to buy bankrupt Lehman Brothers' equities and investment banking business in Europe and the Middle East, and expects to retain "a significant proportion" of the 2,500 staff there. Speculation is growing that Goldman Sachs Group, which like Morgan Stanley is transforming itself into a commercial bank, might turn to Sumitomo Mitsui Financial Group, Japan's number three bank, with which it has a long relationship.