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Leading US banks are reportedly planning to establish an $80 billion (£39 billion) fund to support the ailing market for sub-prime mortgage debt.

Citigroup, JP Morgan and the Bank of America are among those in negotiations to form the fund, as part of efforts to prevent the ongoing global credit crunch from harming the wider economy, according to reports.

British banks HSBC and Barclays were also linked with the reported move, but the former said today that it had not participated in talks with the US banks and stressed that there were no plans to create a similar fund in Europe.

"There are certainly no plans for anything similar in Europe," said Sandy Flockhart, HSBC's head of global commercial banking.

"It's a US sub-prime issue involving two or three of the large US banks and obviously our name is not mentioned at all in this," he added, in comments reported by the Reuters news agency.

Reports suggest that US banks involved in the planned move will announce proposals to buy mortgage-linked securities in a bid to prevent them being dumped on the market at a heavily-reduced price - a development which would hit balance sheets across the banking sector.

Expectations of the fund, dubbed the single-master liquidity enhancement conduit (SMLEC), come amid growing fears about the impact a crisis in the US sub-prime mortgage market could have on the global economy.

Rising default levels for sub-prime mortgages, home loans which are usually offered to people on low incomes or with poor credit ratings, have led to a global credit crunch.

Banks across the world have become increasingly reluctant to lend cash to one another over recent months, due to uncertainty about the extent to which they are exposed to bad debts in the sector.

It is reported that the US Treasury has led talks to establish an industry fund to buy up sub-prime assets and repackage them in a way that will boost confidence in such investments and prevent the crisis spreading to the wider economy.