Former US treasury secretary Lawrence Summers has withdrawn from consideration to be chairman of the Federal Reserve, saying it would hurt the nation for him to go forward with what would be a contentious confirmation before the US Senate.

Defiant Democrats insisted today that they would be able to push through the most sweeping new controls on financial institutions since the Great Depression, following a Senate setback.

A $14bn (€10.5bn) emergency rescue for the big three US car manufacturers collapsed in the Senate today after a union refused to accept Republican demands for swift pay cuts.

INVESTORS breathed a sigh of relief yesterday as equity markets halted their slide on guarded comments from the chairman of the Federal Reserve, Alan Greenspan.