Lending between investors and financial institutions remained at a standstill yesterday, as the end of the third quarter and further global banking problems outweighed the likely passage of the Treasury's $700bn plan to purge the system of toxic assets.

As institutions faced an acute funding squeeze and sought to hold US Treasury bills at the end of the quarter, central banks pumped liquidity into the financial system. That came after regulators either seized control or shored up fragile lenders in the US, UK and Europe.