Caution over Bush move on carmakers

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Speaking on Air Force One travelling to Afghanistan and Iraq, Bush said: "An abrupt bankruptcy for autos could be devastating for the economy, "We're now in the process of working with the stakeholders on a way forward. We're not quite ready to announce that yet."

Though Bush is expected to push through a $14 billion rescue package for the Detroit's Big Three — GM and Chrysler admit they will run out of cash within weeks though Ford is insisting will be okay into 2009 — he admitted the dire state of the companies.

"This will not be a long process," he said, "because of the economic fragility of the autos."

Global equity markets had crashed on Friday when the plans to save the Big Three — icons of America's industrial strength and pillars of the US economy — were scuppered by Republican congressmen demanding big pay cuts for workers at the companies to get them in line with the lower unit costs of the American plants of the Japanese manufacturers.

Apparent commitments by Bush to use part of the $700 billion US financial system rescue plan to prevent the big carmakers slipping into insolvency sent stock markets forward in bullish mood overnight with a surge of almost 5% in Tokyo's Nikkei 225, helped by a near-10% leap in Toyota's shares.

However, after an initial bright opening today in Europe, the FTSE 100 index in London was pegged back to a gain of 20.93 points to 4301.28.

A strong early showing in the Frankfurt's Dax, home to stocks in the mighty German motor industry, slipped back to trade just 69.51 points higher at 4732.88.

Republican politicians were still standing by their ultimatums made to their President.

Republican senator Bob Corker, who led the rebellion last week, said: "The Bush administration has a historic opportunity over the next few days." But, he continued: "The President has to decide: is he still running the White House or is the United Auto Workers [trade union]."