Losses from the collapse in the US sub-prime mortgage market will total between $350bn and $420bn, according to an analysis published yesterday by the Organisation for Economic Co-operation and Development. Financial Times

The figure contrasts with the hair-raising $945bn (£481bn, €599bn) estimate given by the International Monetary Fund last week.

The OECD had previously put subprime losses and writedowns at about $300bn, based on market prices last September, but it said the market panic had distorted pricing so much this method was no longer reliable.

Its new estimates assume that lenders would recover 40-50% of foreclosed loans, if growth and unemployment were similar to the recession of 2001 but house prices weaker than in the early 1990s.

'To get anything like recent mark-to-market losses would require a 0% recovery rate - which seems extreme even for the most bearish,' the OECD said.