US oil services firm Halliburton has agreed to pay $4bn to settle a rash of asbestos-related compensation claims.

The deal, under which Halliburton will pay out $2.8bn in cash and the balance in shares, will cover all present and future asbestos claims against the company.

It ranks as one of the largest asbestos settlements ever.

The agreement is sure to help allay investor fears over potentially ruinous asbestos claims facing many major manufacturers.

Asbestos claims have cost US firms an estimated $54bn so far, with about 60 companies going bankrupt as a result.

Financial strain

European firms have also been hit, with Swiss-Swedish engineering giant ABB losing nearly three quarters of its market value in October due to concerns over the impact of asbestos claims against one of its US subsidiaries.

The compensation claims have also triggered record insurance payouts, putting insurers' finances under strain.

The Halliburton deal follows a landmark agreement in November between US bubble wrap maker Sealed Air Corp. and a group of former employees who claimed they had been exposed to asbestos.

The Sealed Air settlement was held up as a possible blueprint for other firms seeking to resolve asbestos lawsuits.

Future plans

Analysts said the Halliburton deal had removed a major source of uncertainty weighing on the firm's future prospects.

"This should enhance their ability to plan for the future because they don't have this huge contingent liability hanging around forever," said James Stone at UBS Warburg.

Under the deal, Halliburton - once led by US Vice President Dick Cheney - will set up a trust which will be used to settle possible future asbestos lawsuits.

Halliburton shares closed 80 cents lower at $19.55 on the New York stock exchange.

Asbestos can cause cancer and other respiratory diseases if inhaled.

Thousands of workers who have been exposed to the substance have lodged compensation claims against their employers in recent years.

Most of the claims date back to the 1960s and 1970s, when asbestos was widely used as an insulating material.