NEW YORK (AP) — Wall Street extended its slump into yet another week yesterday as investors worried that even a safety net set up for mortgage financiers Fannie Mae and Freddie Mac won't head off further troubles in the financial markets.

Investors' latest unease about the banking sector comes in a week when many financial names are to issue quarterly reports — many of which will likely include sizable write-downs of souring mortgage debt.

The Treasury and the Federal Reserve said yesterday they would aid Fannie Mae and Freddie Mac if needed. Wall Street has been on edge about the well-being of the government-chartered companies because they together hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the US. Washington's efforts to shore up confidence in Fannie Mae and Freddie Mac at times helped those shares yesterday but troubles arose in other corners of the financial sector.

Investors worried about a run on IndyMac Bancorp Inc. that led to the bank's takeover by the government on Friday. IndyMac is the largest regulated thrift to fail. Trading in shares of regional bank National City Corp. was briefly halted as the company responded to rumors of financial troubles. The bank said in a statement it is experiencing "no unusual depositor or creditor activity" and that as of Friday's close it had more than $12 billion of excess short-term liquidity.

The rumours and sell-off of regional banks reflect the unease investors have about where financial troubles might emerge.

"My sense is that investors are taking a pretty cautious stance," said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago. "The government can't bail out the whole industry."

The Dow Jones industrial average fell 45.35, or 0.41 percent, to 11,055.19 after spiking nearly 140 points in early trading.

Worries over Fannie Mae and Freddie Mac on Friday led to a volatile session in which the Dow dipped below the 11,000 mark for the first time in about two years before paring its losses; the market suffered its fourth straight losing week.

Broader stock indicators also dropped yesterday. The Standard & Poor's 500 index fell 11.19, or 0.90 percent, to 1,228.30, and the Nasdaq composite index fell 26.21, or 1.17 percent, to 2,212.87.

Declining issues outnumbered advancers by about three to one on the New York Stock Exchange, where volume came to 1.41 billion shares.

Bond prices jumped as investors sought the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its yield, fell to 3.86 percent from 3.96 percent late on Friday.

The dollar was mixed against other major currencies, while gold prices jumped.

Light, sweet crude settled up 10 cents at $145.18 a barrel on the New York Mercantile Exchange.

Fannie Mae and Freddie Mac were volatile after tumbling last week amid concerns they would succumb to losses in their mortgage portfolios. The Fed said it would lend to the two companies "should such lending prove necessary." Treasury Secretary Henry Paulson said his department is asking Congress for quick approval of a plan to expand its line of credit to the two companies and to make an equity investment in them if necessary.

Fannie Mae fell 52 cents, or 5.1 percent, to $9.73, while Freddie Mac fell 64 cents, or 8.3 percent, to $7.11.

While the companies say they have adequate access to capital, the government's effort to help the companies is designed to reassure investors who have grown nervous about further fall-out from the nearly year-old credit crisis.

"There's a disconnect with saving Fannie and Freddie and bailing out the shareholders," Ablin said. "If the government steps in and ultimately creates a bailout of these entities, I'd be astounded if equity holders were left with anything. I think the market is realising that."

National City fell 65 cents, or 14.7 percent, to $3.77.

Other banks declined, too: Washington Mutual Inc. fell $1.72, or 34.8 percent, to $3.23.

Jeff Kleintop, chief market strategist at LPL Financial Services in Boston, said investors are pouncing on banks in regions where the housing market pull-back has been the steepest, thinking they are likely to have the greatest exposure to bad mortgage debt.