Mitsubishi UFJ Financial Group Inc took a $506 million paper loss on its $9 billion investment in Morgan Stanley after the rejection of the US financial rescue plan sent banking stocks tumbling.

As part of the deal, the Tokyo-based lender agreed to buy $3 billion of Morgan Stanley's common stock for $25.25 a share. The second-largest US securities firm plummeted 15 percent in New York Stock Exchange composite trading to close at $20.99.

The loss underscores the risks involved for Asian companies seeking bargains in the wreckage on Wall Street. Morgan Stanley, Citigroup Inc. and Merrill Lynch & Co have tapped the region's banks and sovereign wealth funds for money in the past year as falling US home prices triggered the worst financial crisis since the Great Depression.