U.S. markets slid Monday as Wachovia Corp. was sold to Citigroup and Washington legislators moved closer to a vote on a $700 billion bailout plan.

Citibank said it would purchase North Carolina's Wachovia Corp, for $2.2 billion -- $1 per share. In the deal, the Federal Deposit Insurance Corp. will absorb about $42 billion in Wachovia's losses in exchange for $12 billion in preferred stock and warrants from Citigroup, The New York Times reported.

In early afternoon trading, the Dow Jones industrial average was down 255.43 points, or 2.29 percent, to 10,887.70. The Standard and Poor's 500 was off 3.61 percent, 43.74 points, to 1,169.27. The Nasdaq composite index lost 93.16 points, 4.27 percent, to 2,090.11.

The benchmark 10-year U.S. Treasury bond rose 1 11/32 to yield 3.691 percent.

The dollar was mixed Monday. The euro fell to $1.4403, compared to $1.4626 Friday. Against the Japanese yen, the dollar was at 105.08 yen, down from 106.37 yen.

In Tokyo, the Nikkei average lost 149.55 points to 11,743.61, down 1.26 percent.

The FTSE index in London lost 269.70 points to 4,818.80, off 5.3 percent.