NEW YORK » Tension grew in the financial markets yesterday, sending stocks mostly lower as investors worried about the effectiveness of a still-emerging government plan to rescue banks from crippling debt. The credit markets also showed added strain, with rising demand for short-term Treasury bills, considered the safest of investments.

Wall Street was calmer than during the first two days of this week, with stocks meandering in and out of positive territory while investors tried to determine what shape the $700 billion plan might take. But the atmosphere was uneasy enough to erode the market's initial enthusiasm over investor Warren Buffett's decision to invest $5 billion in Goldman Sachs Group Inc.

As the session wore on, investors focused on broader concerns that the dealmaking in Washington could produce less potent medicine than proponents say is necessary to aid moribund credit markets. Fear about bad debt on the books of financial companies has led to tightness in credit markets. That has made it difficult for businesses and consumers alike to borrow money.

Treasury Secretary Henry Paulson told the House Financial Services Committee that he agreed to limit the pay of Wall Street executives whose companies might benefit from the proposed $700 billion measure for financial services firms.

Demand for short-term government Treasuries increased as investors again sought safe places to keep cash. The yield on the 3-month Treasury bill, considered the safest short-term financial asset, was at 0.49 percent late yesterday, down from 0.79 percent late Tuesday.

In other Treasury trading, the yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.81 percent from 3.80 percent late Tuesday.

The Dow Jones industrial average fell 29.00, or 0.27 percent, to 10,825.17 after moving in and out of positive territory. The decline leaves the Dow down more than 560 points, or about 5 percent, for the week.

Broader stock indicators were mixed. The Standard & Poor's 500 index slipped 2.35, or 0.20 percent, to 1,185.87, and the Nasdaq composite index rose 2.35, or 0.11 percent, to 2,155.68.

The dollar, whose struggles earlier this week contributed to extreme volatility in other markets, was mixed. Meanwhile, gold prices rose.

Light, sweet crude for November delivery fell 95 cents to $105.66 a barrel on the New York Mercantile Exchange.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 1.08 billion shares.

The Russell 2000 index of smaller companies fell 11.42, or 1.61 percent, to 697.77.

Shares of Goldman Sachs Group Inc. rose $4.85, or 4 percent, to $130 yesterday after Buffett's Berkshire Hathaway Inc. said late Tuesday it was investing at least $5 billion in Goldman - a move Wall Street took as a sign of support for the independent investment bank model.