NEW YORK - Financial markets pulled back in uneasy trading Monday as investors awaited details of the government's plan to buy $700 billion in banks' mortgage debt. The Dow Jones industrial average fell more than more than 200 points while the credit markets remained nervous, but not showing the signs of panic that Treasury trading saw last week.

Investors are relieved that federal authorities are taking action to relieve the nation's banks of their toxic assets. But it is not sure yet how successful the plan will be in thawing credit markets, which many businesses depend on to fund day-to-day operations, and for propping up the still-weak housing market.

Bush administration officials and congressional leaders have been meeting on the rescue plan, the thrust of which congressional leaders have endorsed. Many market observers are hoping for details of the plan to emerge by midweek. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are scheduled to appear before Congress on Wednesday for a briefing on the economy.

"For now I think the market is giving everyone the benefit of the doubt," said Axel Merk, portfolio manager at Merk Funds. "This is not an 'all is clear' signal that we have now."

While investors try to determine how helpful the government's lifeline might be they also were absorbing more news about the rapid changes in the banking sector. Morgan Stanley said it is working to sell up to a 20 percent stake to Japan's Mitsubishi UFJ Financial Group Inc., perhaps a sign that the government's stabilizing hand will make investors more willing to put money into banks.

The announcement comes after the Federal Reserve late Sunday granted Morgan Stanley and Goldman Sachs, the country's last two major investment banks, approval to change their status to bank holding companies. The change of status will allow the companies to set up commercial banks that will be able to take deposits, significantly bolstering the resources of both. They also will be subject to more regulation.

That shift came a week after negotiations failed to save Lehman Brothers Holdings Inc. That and the government's plan to bail out American International Group Inc. helped lead to a seizing up of the credit markets that spurred the government to formulate its plan to rescue companies from their crippling debt.

The yield on the Treasury's 3-month Treasury bill was at 0.93 percent Monday, down slightly from 0.94 percent late Friday, indicating that investors were still willing to take low returns on a safe asset. However, the yield was a far cry from yields around zero at the height of last week's frenetic buying, however; yields move in the opposite direction from price. Short-term Treasurys are seen as the absolute safest place to place cash.

The Treasury's 2-year note's yield was at 2.23 percent, up from 2.14 percent Friday. The yield on the 10-year benchmark Treasury was higher, at 3.89 percent compared with 3.82 percent Friday.

In late morning trading, the Dow Jones industrial average fell 206.36, or 1.81 percent, to 11,182.08. The retreat comes after the stock market's best two-day session in years so some retrenchment, especially amid the anxiety on the Street, wasn't unexpected.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 25.07, or 2.00 percent, to 1,230.01, and the Nasdaq composite index fell 43.56, or 1.92 percent, to 2,230.34.

The market did get some good news from Microsoft Corp., which said it plans to repurchase as much as $40 billion of its shares. The software maker said it completed a previous $40 billion buyback plan. The company also raised its quarterly dividend to 13 cents from 11 cents. Microsoft rose $1, or 4 percent, to $26.16.

Morgan Stanley said it signed a letter of intent to sell its stake to Mitsubishi UFJ Financial and that the price of the stake would be based on Morgan's book value after Mitsubishi completes due diligence. Morgan Stanley rose $2.68, or 9.9 percent, to $29.89.

Meanwhile, Goldman Sachs fell 25 cents to $129.55 following announcement of its move to become a commercial bank.

The dollar was mixed against most other major currencies, while gold prices rose.

Investors were also watching rebounding oil prices. Light, sweet crude for October delivery rose $3.06 to $107.61 a barrel on the New York Mercantile Exchange. On Friday, crude oil jumped by more than $6 a barrel to break back above the $100-a-barrel mark.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 347.8 million shares.

The Russell 2000 index of smaller companies fell 17.21, or 2.28 percent, to 736.52.

Overseas markets were mixed. In Asia, Japan's Nikkei 225 index climbed 1.4 percent to 12,090.59 points, and Hong Kong's Hang Seng Index rose 1.6 percent to 19,632.20. In European trading, London's FTSE fell 0.34 percent, Germany's DAX declined 0.47 percent and France's CAC 40 fell 0.66 percent.

Title: News at Noon Date: September 22nd, 2008 A quick look around the region, nation and world on the events of the day for Monday, Sept. 22, 2008. VIEW PRESENTATION »