LONDON, Oct 2, 2008 (AFP) - Europe's main stock markets rose and Asian indices mostly fell on Thursday after the US Senate approved a modified rescue package for the stricken financial sector.

The US Senate resoundingly passed a sweetened 700-billion-dollar Wall Street bailout late Wednesday, though the House of Representatives had yet to follow suit after killing an earlier bid to avert a world financial meltdown.

'Traders may be unwilling to jump back in,' said CMC Markets dealer Matt Buckland. 'There are still worries about passage through the lower house.' Wall Street, which had ended lower on Wednesday ahead of the vote, was due to reopen at 1330 GMT.

In European morning trade on Thursday, London rose 0.76 percent, Paris climbed 0.84 percent and Frankfurt gained 0.34 percent.

Investors in Asia were not so positive however. Tokyo closed down 1.88 percent on Thursday, hitting a three-year low. Seoul fell 1.39 percent, Taiwan share prices lost 1.05 percent and Sydney shed 0.7 percent.

'There seem to be doubts whether the rescue plan will be passed in the US House despite its passage in the Senate,' said Lee Sun-yup, an analyst at Goodmorning Shinhan Securities.

Hong Kong managed a gain of 1.1 percent on Thursday that dealers said was thanks to a strong rally in Ping An Insurance, which ended a plan to buy half of Fortis' asset management arm, dealers said.

The Senate voted 74-25 late Wednesday to back an amended bailout, aiming to ease the credit crunch that has shaken the world economy and brought the bankruptcy of Wall Street banking titans such as Lehman Brothers.

The vote increased pressure on the House of Representatives to pass the legislation, after it rejected a first version on Monday.

President George W. Bush called on the House to vote before the end of the week to avoid further damage to the US economy. But there were conflicting signals over the bill's prospects.

'The American people expect and our economy demands that the House pass this good bill this week and send it to my desk,' Bush said in a statement.

The Senate sweetened the original deal, which gives the US Treasury the power to buy up toxic mortgage debt choking the financial industry, to court conservative Republicans who helped block the original version.

Senators raised the ceiling on federal insurance for bank deposits from 100,000 dollars to 250,000 dollars, and added up to 100 billion dollars in tax break extensions.

They also restricted 'golden parachute' severance payments to disgraced Wall Street executives.

'Although the US senate forced through the financial bailout package last night, the story is far from over as there are mutterings that the house of representatives may still reject it despite the grudging changes to the small print,' said Mike Estrey, research director at Fyshe Horton Finney.

In foreign exchange trading on Thursday, the euro hit its lowest point against the dollar for a year. The European single currency dropped to 1.3856 dollars in early London deals.

The European Central Bank was widely expected to keep eurozone interest rates on hold at 4.25 percent when it meets later in the day.

Ahead of the rate decision the ECB renewed one-day loans of 50 billion dollars (35 billion euros), in what has become a regular effort to keep cash flowing on distressed interbank money markets.