The risk of fire sales of securities was rising yesterday after rating agencies declared that some complex debt vehicles had defaulted and with signs that the "superfund" plan backed by the US Treasury has stalled.

The developments are likely to raise investor fears and increase pressure on US authorities to take measures to shore up sentiment in the credit world.

Financial markets yesterday continued to be gripped with worries about further subprime-related writedowns, driving the dollar to new lows and gold to a 28-year high.

The $75 billion superfund plan - designed to purchase assets from distressed investment linked to banks and thus prevent fire sales in the market - seems to be on ice following the upheaval at Citigroup, which lost its chief executive on Sunday after admitting it faced mortgage-related writedowns of up to $11 billion.

"As far as we can see it appears dead in the water right now," said one senior Wall Street banker.

Citigroup's shares were down another 3 per cent, and Morgan Stanley fell almost 3 per cent as David Trone, analyst at Fox-Pitt Kelton, said it could face a further $6 billion of mortgage-related writedowns.

Investors are also worried about the health of US bond insurers, such as MBIA and Ambac, whose central role in the capital markets is dependent on their high credit ratings.

Fitch, the rating agency, warned on Monday that it was reviewing the capital adequacy of the companies to assess whether their AAA ratings were justified.

There is also a mounting threat of such fire sales by collateralised debt obligations as rating downgrades puts more of the vehicles in technical default. Such sales would drive down prices, putting more pressure on banks with subprime exposure.

Rating agencies Standard & Poor's and Moody's have issued default notices to $5 billion worth of collateralised debt obligations in recent weeks, giving senior investors the right to sell the assets.

Some observers fear it may now prove impossible to create the superfund quickly enough to help banks deal with the funding problems dogging structured investment vehicles. Expectations are rising in the financial markets that banks may be forced to provide more help to the SIVs they manage in the coming weeks to prevent a fire sale of their assets.