Updated from 1:50 a.m. EDT

Asian stocks closed lower Friday and stocks in Europe were falling as a compromise in Congress on the Bush administration's $700 billion bailout to buy toxic debt was in disarray, and

Washington Mutual

(WM) - Get Report

became the largest bank to fail in U.S. history.

Stock market futures in the U.S. also were trading to the downside.

Negotiators in Congress broke off talks Thursday as House Republicans offered a competing plan late in the day that derailed a bailout compromise that was taking shape, according to reports.

Meanwhile, Washington Mutual was seized by the Federal Deposit Insurance Corp., and

JPMorgan Chase

(JPM) - Get Report

agreed to buy all the deposits, assets and certain liabilities of the failed bank.

Japan's Nikkei 225 stock average closed down 113.37 points, or 0.9%, to 11,893.16, while the Hang Seng index in Hong Kong closed lower by 1.3%. Stocks in the financial sector were hardest hit.

Shares on the FTSE 100 index in London were down 76.10 points, or 1.5%, to 5120.92. The DAX index in Frankfurt fell 1.6%.

Futures in the U.S. fell Friday.

S&P 500

futures fell 19.70 points to 1193.90, and were trading 18.07 points below fair value.

Nasdaq

futures fell 21.25 points to 1658.75, and were trading 39.58 points below fair value.

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Crude oil fell $2.71 a barrel to $105.31 in electronic trading on the

New York Mercantile Exchange

.

The dollar fell against the yen and rose vs. the euro.