The European Commission yesterday held out the possibility of approving an emergency aid package by the German government to rescue Philipp Holzmann, the heavily indebted construction group.

Mr Mario Monti, the EU's competition commissioner, said aid could be granted under new guidelines "as a short-term holding operation while the future prospects of enterprises are assessed".

His comments came as Mr Frank Steinmeier, Chancellor Gerhard Schroder's right-hand man, sounded out competition officials in Brussels about issuing a DM300 million guarantee to help cover the group's debts.

Mr Schroder yesterday called an 11th-hour meeting with bank creditors at Holzmann's Frankfurt headquarters in an effort to persuade them to back a DM4.3 billion package to save the insolvent company.

Holzmann shares reacted enthusiastically to the talks, closing almost 50 per cent higher. The shares had fallen 81 per cent on Tuesday.

Mr Monti said he was aware that the aid might be granted, but the Commission would have to be notified and so far had not been informed "formally".

Under EU rescue and restructuring aid guidelines adopted in October, governments can provide loans to companies for six months as long as they come up with either a detailed restructuring package for the company during that time, or the company is liquidated, or the loan is repaid.