7:30PM Frankfurt, 1:30PM New York – European stocks fell on the weakness in mining and financial stocks.

European markets closed lower as the U.S. lawmakers debated the merits of bailout plan and conditions that should be attached to the plan. The Treasury secretary Paulson plans asks for $700 billion and unlimited authority to conduct price discovery of illiquid assets held mostly by large institutions. Lawmakers are increasingly concerned that most of the money will only help rich bankers and may not help home owners who are on the verge of losing their homes.

Benchmark index CAC 40 in Paris led the decliners in the region with a loss of 1.9% followed losses of 1.9% in London, of 1.8% in Stockholm, of 1.4% in Madrid and Milan and 1.2% in Zurich.

In London trading copper, zinc, gold and aluminum prices fell as investors worried that regardless of the U.S. bailout plan global economy will slow down. Banks and miners in trading fell sharply as prices of metals fell and investors worried that the U.S. bailout plan may prevent the U.S. sliding into a recession.

Index that tracks manufacturing in a survey conducted by Markit Economics in London across the European region fell to 45.3 in September from 47.6 in August. The index below 50 shows a contraction in the sector. An index that measures the service index tracked by Royal Bank of Scotland, composite index dropped 47 in the month from 48.2 in August.

Barclays dropped 4% to 357.25 pence, Societe Generale declined 3.4% to 62.42 euros and Man Group dropped 8.2% or 35 pence to 398 pence after the company rating was lowered by Jeffries.

Escada AG plunged 9% to 9.95 euros after the designer apparel maker said that the third quarter sales are likely to decline and loss are expected to rise.

Of the stocks in DAX 30 index in Germany 20 closed lower and 10 rose. MAN AG fell 4.4% followed by losses in Linde AG of 4.3%, in Volkswagen of 3.7%, in Thyssenkrupp AG of 3.5%. Deutsche Postbank led the gainers in the DAX 30 index with a rise of 3.4% followed by increase in 2% of RWE AG, E.ON AG of 1.3%.

Of the stocks in CAC 40 index, Carrefour SA led the gainers in the index with a rise of 1.6% followed by gains in Lagardere SCA of 0.97% and 0.6% in GDF Suez. STMicroelectronics fell 5% followed by losses of 4.6% in PPR, of 4.4% in Schneider Electric, of 4.3% in LVMH and 4.2% in Accor.