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LONDON, Sept 30 (Reuters) - U.S. Treasuries fell in Europe on Tuesday, giving back some of the gains seen after lawmakers rejected a $700 billion financial rescue plan, with dealers citing cautious optimism a deal would eventually be found.

In a move which shocked markets late on Monday, U.S. Congress voted 228-205 against the proposed rescue plan, which would see billions of pounds of taxpayers' money used to remove toxic debt removed from banks' balance sheets.

Shares slumped and safe-haven government debt rallied on the news, which was delivered to already edgy markets after a day that had seen the credit crisis claim several new victims, including Wachovia Corp and a bevy of European banks.

However, European shares gained a footing and U.S. stock futures pointed to a higher open on Wall Street on Tuesday.

"Talking to people, there's a view that the plan will go through in some form at some point. The system has always come through but maybe we just have to be a little bit patient," said one trader.

At 0859 GMT, December Treasury futures were 22/32 lower at 115-57/64. Two-year Treasury yields were 18.7 basis points higher at 1.816 percent, having fallen as low as 1.589 percent on Monday. Ten-year yields were 11.2 basis points higher at 3.687 percent.

The cost of insuring 5-year and 10-year U.S. government against default was 25 and 30 basis points respectively, according to specialised data provider CMA.

For a wrap up of the latest events in the global financial crisis see New York Treasury report All US news US government debt All debt news World Bonds report Debt auctions Dollar Eurobond issues SPEED GUIDES Keywords: MARKETS BONDS TREASURIES

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