Wall Street bailout deal in "limbo"

Talks to find consensus on a $700 billion (£377 billion) rescue plan in the United States have stalled, negotiators have said.

An agreement to the Bush administration's bailout package had appeared close late last night before a group of maverick Republicans – reportedly led by John McCain - proposed a new solution.

The failure to agree upon the package has already taken its toll; Washington Mutual has been taken over by the authorities and sold to JPMorgan Chase for $1.9 billion (£1 billion) – the largest banking collapse in American history.

Negotiations between Congressional leaders were said to be making progress towards a deal on Thursday before an emergency meeting at the White House, attended by Mr McCain and fellow White House nominee Barack Obama.

A new plan proposed by the Republicans was rejected out of hand by the Democrats, reports claim.

Speaking to journalists after leaving the talks, which are due to resume later on Friday, Republican senator Richard Shelby said the bailout was in "limbo".

Yesterday George Bush warned that a failure to accept the bailout would lead to "financial panic" in the US.