Politicians are battling to stop the loss of 1,300 jobs after the UK's second largest steel company called in receivers.

Cardiff-based Allied Steel and Wire has been unable to secure continued financial support from its banks after enduring a rough economic ride in the wake of US steel export tariffs.

Its shares were suspended on the London Stock Exchange while the company clarifies its financial standing, under control of accountants KPMG.

Prime Minister Tony Blair regrets the collapse of ASW

Prime Minister Tony Blair and Welsh Assembly ministers have pledged to do all they can to help threatened workers.

It has emerged the UK Government and the Cardiff Bay administration have been holding secret talks to cushion the blow for weeks.

• In view of the assembly, ASW's nearby plants in the bay make high-quality, specialist steel products, for the construction sector in particular.

• The company employs 1,000 in the Welsh capital, 300 at Sheerness in Kent and 30 at Belfast.

• Its share price ended at 2.5p on Tuesday evening, valuing the business at �5m. At their peak, shares were worth 100 times as much.

Chief executive Graham Mackenzie said staff would continue to be employed while receivers KPMG sort out the future of the business.

He added: "It will be for the receiver to decide what will happen next. Hopefully, he will find a buyer for all or part of the business."

Nine-hour crisis talks - involving Mr Mackenzie, Welsh Economic Development Minister Andrew Davies, Lloyds-TSB and Natwest-RSB and the Department for Trade and Industry - on Monday could not stop ASW slipping toward collapse.

On Tuesday, a last-minute meeting of the company and its banks failed to resolve their differences.

Allied Steel and Wire

Cardiff: 1,000 Sheerness: 300 Belfast: 30 CEO Graham Mackenzie Receivers: KPMG

ASW invested the banks to appoint administrative receivers.

Andrew Davies said it was "a matter of huge regret" and a "very, very grave" situation for workers, but he stressed ASW had not yet been earmarked for closure.

And he pledged the Welsh Assembly's full support in trying to maintain a long-term future for the operation and its skilled workforce, saying ministers at Cardiff and London had done everything they could.

The assembly will work within state aid regulations to provide limited assistance to the receivers, he said.

American impact

In the House of Commons, Prime Minister Tony Blair told MPs that ministers "very much regret" the news.

"There have been meetings with ministers and the company to avoid the situation," he revealed.

"We will do everything we can to help those employed by the company in these circumstances."

Rhodri Morgan's Welsh Assembly is helping

He was responding to Labour MP Derek Wyatt's claim that heavy US steel import tariffs had been the "last straw" for ASW.

Mr Mackenzie has been a staunch critic of the government's policy toward the highly-valued pound and of President Bush's measures, which punish US companies for buying in foreign steel from companies like ASW.

Mr Blair told the Commons he hoped a current World Trade Organisation investigation would declare the White House moves illegal, while Europe and Japan are considering retaliatory measures.

ASW posted big second-quarter losses, in the wake of Mr Bush's announcement.

The company announced that, although demand for reinforcing steel is buoyant, sales in Germany in particular are down on the same period last year.

'Devastating' news

Receiver KPMG's Richard Hill said ASW was the "victim" of the US tariffs and of the UK's high pound had contributed to ASW's decline.

But he said there has already been interest from "a number of interested parties" in buying company assets with sale discussions going on as quickly as possible.

First Minister Rhodri Morgan said it was a "very sad day for anybody connected with the steel industry" while local MP Alun Michael and Lord Mayor Russell Goodway both said it was "devastating".

The group's products are mainly derived from recycled scrap metal, making it one of the largest users of recycled material in Europe.

With production facilities in Cardiff, Sheerness and Belfast, the Group is well established in its principal European markets in the UK, Benelux, Eire, France, Germany and Spain.