TOKYO — Most Asian stock markets fell today in stunned dismay over U.S. lawmakers' rejection of a $700 billion bank rescue plan aimed at stabilizing the U.S. financial system. European markets opened mixed.

Markets across Asia opened sharply lower amid fears that the setback could lead to a broader global financial crisis. But as trading progressed, many indices erased losses and Hong Kong's market staged a dramatic turnaround to close slightly higher as investors scooped up beaten-down shares.

Japan's benchmark Nikkei stock 225 index slumped 4.12 percent to close at 11,259.86 — the lowest level since June 9, 2005. In Australia, the S&P/ASX-200 index fell 4.3 percent after falling as much as 5.3 percent.

The bailout rejection dealt a "severe blow to Asia markets right after the Lehman shock," said Mitsushige Akino, fund manager at Ichiyoshi Investment Management in Tokyo, referring to the collapse earlier this month of the U.S. investment bank.

Even if it does pass, the bailout is seen as the beginning of long, arduous process at cleaning up the bad debt mess.

"Many investors grew even more cautious because of the latest development over the (bailout) bill, and they only see passage of the bill as a minor improvement to the crisis," Akino said.

A couple markets bounced back in signs that some investors thought shares were oversold. Hong Kong's Hang Seng index gained 0.76 percent to close at 18,016.21 after earlier plunging more than 5 percent. India's Sensex was up 2.4 percent in afternoon trading.

European markets were modestly mixed in early trading today, with Britain's FTSE 100 little changed at 4,817.79 and France's CAC up 0.3 percent.

In Russia, regulators halted trading on its two major stock exchanges today after markets there opened significantly lower.