North American stock markets appear to be headed higher on Friday as Wells Fargo & Co. has agreed to buy troubled bank Wachovia Corp. in a US$15.4-billion takeover.

The news is expected to satisfy investors because the deal will require no government assistance, thereby scrapping Wachovia’s federally backed deal with Citigroup Inc. announced earlier this week.

But investors are still expected to remain on the edge of their seats as the U.S. House of Representatives will vote on the Bush administration’s US$700-billion bailout package for the financial sector on Friday. A previous version of the package was voted down earlier this week, which sent markets tumbling.

In addition, U.S. employers cut payrolls at the steepest rate in five-and-a-half years in September, cutting an unexpectedly significant 159,000 jobs as employment contracted for a ninth straight month. The unemployment rate was unchanged from August at 6.1%, the highest rate in five years, as 121,000 people left the workforce, the U.S. Labor Department reported on Friday.

Back in Canada, CIBC announced on Friday that it will limit its exposure to the U.S. subprime mortgage market through a US$1.05 billion agreement with a fund arranged by Cerberus Capital Management.

“This transaction sets a floor under CIBC’s exposure to the U.S. residential mortgage market,” said Gerry McCaughey, CIBC’s CEO in a statement.

But overseas on Friday, Asian markets were in the red as doubts that a US$700 billion financial bailout package would prevent a recession.
Japan’s Nikkei 225 stock average dropped 216.62 points, or 1.94%, to 10,938.14, its lowest level since May 2005.In Hong Kong, the Hang Seng index also fell 2.3% to 17,804, while markets in Australia, Singapore, India, Malaysia and Thailand were also down.
The fall on the Asian markets comes in the wake of a plunge in North America on Thursday. The S&P/TSX composite index closed at 10,900.54 on Thursday after dropping 813.97 points, or 6.95%.

The S&P/TSX Venture composite index also slid more than 6%, ending the day down 94.69 points at 1,311.96.

In New York, the Dow to its lowest level in three years. The Dow Jones industrial average fell 348.22 points, or 3.2%, to close at 10,482.85.

The Nasdaq shed 22.48 points, or 1.1%, to close at 1,976.72. The S&P 500 slipped 46.78 points, or 4%, ending the day at 1,114.28.