FEARS were growing for hundreds of jobs last night after ailing engineering firm Kvaerner admitted a speedy rescue deal looked unlikely.

Company bosses were holding talks with bankers and major shareholders which were expected to continue into the night.

Kvaerner, which has more than 500 workers on Teesside, had been attempting to tie up the sale of its hydrocarbon and process technology activities by today.

The deal, putting more than £100m into the company's coffers, is aimed at solving a short-term liquidity crisis which could see Kvaerner run out of cash later today.

Last night, Paul Emberley, a spokesman for Kvaerner, said he could not comment on the outcome of the talks taking place at its headquarters in Oslo, Norway.

But he said it was very unlikely one of two £50m deals would be concluded by this morning.

"We are looking at other measures to try and find our way around this short-term liquidity problem," said Mr Emberley.

Kvaerner is attempting to tap into cash sitting in its subsidiary businesses, but legal conditions are understood to be holding up access to the money.

It hopes to sell off its chemical research facility at Stockton and another plant in the South-East.

The company has raised the prospect of bankruptcy and says it can give no guarantees over jobs.

Employees have already been warned of Kvaerner's financial plight and are bracing themselves for cuts.

Under Norwegian law, it could seek protection from its creditors by seeking a court order to allow it to continue trading while in bankruptcy.

This would give it time to sort out its financial affairs and take advantage of short-term loan facilities.

Kvaerner has to make an announcement on its financial situation to the Norwegian stock exchange this morning