European leaders yesterday set about finding a new candidate to lead the International Monetary Fund after their initial choice failed to win majority backing from the fund's board.

Among the names being canvassed to replace Mr Caio KochWeser, the top German finance ministry official first nominated, was Mr Giuliano Amato, the former Italian prime minister.

Germany publicly continued to stand behind Mr Koch-Weser yesterday but has begun preparing for a tactical retreat. Berlin was under mounting pressure from its European allies to withdraw his candidature and clear the way for a fresh nomination. Mr Jaime Gama, foreign minister of Portugal, which holds the EU's revolving presidency, said: "The EU maintains a consensus in support of the German candidate. But if Germany withdraws Mr Koch-Weser's name, we will seek a new EU candidate."

His comments came as Mr Gerhard Schroder, German chancellor, discussed the stalemate with Mr Antonio Guterres, the Portuguese prime minister. Earlier, German officials appeared not to rule out another German or European candidate being proposed.