UPDATE: Senate sets vote; stocks flat

WASHINGTON (AP) - The Senate moved toward passage Wednesday of a $700 billion financial industry bailout as opposition to the package among House Republican conservatives appeared to be softening, thanks partly to a provision increasing insurance for people's deposits.

Congressional leaders from both parties said they were hopeful that a new version of the rescue plan could be cleared late this week after its stunning defeat that sparked a historic sell-off on Monday. House Democratic leaders tentatively planned a Friday vote.

One House Republican who joined two-thirds of GOP lawmakers Monday in voting "no" indicated he's reconsidering. Others were also pondering a switch, according to congressional officials who spoke on condition of anonymity because they haven't publicly committed to changing their votes.

Rep. John Shadegg of Arizona, a leading conservative, told a Phoenix radio station Wednesday that he'd be "inclined to vote for the bill" if it raised the cap on federal deposit insurance and changed a rule that forces companies to devalue assets on their balance sheets to reflect the price they can get on the market.

The revised package to be voted on in the Senate, which adds $100 billion in tax breaks for businesses and the middle class, temporarily increases the deposit insurance cap from the current $100,000 to $250,000. The Securities and Exchange Commission said Tuesday it was easing the accounting rules in some cases.

Even a 50-50 proposition might have been attractive on Wall Street. Credit markets remained extremely tight and stocks also fell early on a report that an index of manufacturing activity fell significantly in September.

At about 3 p.m., the Dow was mostly flat, standing at 10,786.78, down 63.88 on the day.