NEW YORK (AP) - Financial markets remained on edge yesterday after the Bush administration's proposal for a $700 billion banking bailout ran into opposition from Republican lawmakers. Stocks ended mixed, with big financial companies lifting the Dow Jones industrials more than 120 points, but worries about smaller banks and parts of the technology sector taking much of the market lower.

Demand for safe-haven buying in government debt remained high as investors uneasily watched events in Washington, where the Bush administration tried to overcome Republican objections to its rescue package.

GOP lawmakers are concerned about the cost of the proposal, and they balked at the plan after congressional leaders said on Thursday they had reached an agreement in principle. Shortly after Friday's opening bell on Wall Street, President Bush said at the White House lawmakers can express doubts but ultimately should "rise to the occasion" and approve a plan to stave off what he sees as an economic calamity.

The rescue is designed to remove billions of dollars of bad mortgages and other now-toxic assets from the books of financial firms in a bid to free up lending. Tight lending conditions make it harder and more expensive for businesses and consumers to borrow money, a headwind for the economy. In a last-minute shake up, some Republican lawmakers wanted an alternative plan under which the government would provide insurance to companies that agree to hold frozen assets, rather than have the US purchase the assets.

Volume was relatively light yesterday as many investors chose to just wait. That helped skew some of the movements in the major indexes.

"I think the markets are on pause trying to figure out where this is going to go. Congress is still there," said Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas. "Right now everyone is a little bit shell-shocked."

With no deal in place as trading ended yesterday, investors were certainly going to be uneasy throughout the weekend. And there was no way to predict whether Monday morning would bring calmer markets after weeks of intense volatility, or whether the turbulence would accelerate. Even if a deal is reached over the weekend, its terms will determine how the markets start the week.

Credit markets remained strained Friday, though they showed improvement. The yield on the three-month Treasury bill, considered the safest short-term investment, rose to 0.84 percent from 0.72 percent late on Thursday. The lower the yield on a T-bill, the more desperation there is in the market; investors are at times willing to take the slimmest returns to preserve their principal. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.85 percent from 3.84 percent late on Thursday.

According to preliminary calculations, the Dow rose 121.07, or 1.1 percent, to 11,143.13. Gains by JPMorgan Chase & Co. and Bank of America Corp. gave support to the 30-stock index. Most of their advance came late in the session as investors placed bets that a deal would emerge from Washington over the weekend.

Broader indicators were mixed. The Standard & Poor's 500 index rose 4.09, or 0.34 percent, to 1,213.27, and the technology-heavy Nasdaq composite index fell 3.23, or 0.15 percent, to 2,183.34.

Declining issues outnumbered advancers by more than two-to-one on the New York Stock Exchange, where volume came to 1.17 billion shares.

For the week, which again saw triple-digit moves in the Dow, the blue chip average lost 2.15 percent, the Nasdaq declined 3.98 percent and the Nasdaq fell 3.33 percent.

Stocks traded unevenly yesterday, with technology shares falling sharply after Research In Motion Ltd. warned late on Thursday that its gross margins would contract in the current quarter because of the costs for producing three new BlackBerry models.

The stock fell $25.45, or 26 percent, to $72.08.

The market was also uneasy after Washington Mutual Inc. (waMu) became the largest US bank to fail. The Federal Deposit Insurance Corp. seized WaMu on Thursday and then sold the thrift's banking assets to JPMorgan for $1.9 billion. It was the latest financial firm to collapse under the weight of enormous bad bets on the mortgage market.

Although WaMu's failure was expected, it nonetheless underscored for investors how widespread the problems are in the financial sector.