Stockholm - The Swedish government said Friday it was concerned over the US Senate's failure to agree on a loan package for the troubled US car industry, which owns Swedish carmakers Volvo and Saab.

The news from Washington also impacted the Stockholm bourse that dropped some 3.5 per cent in early trading.

Speaking to Swedish televison news on the sidelines of a European Union summit in Brussels, Swedish Prime Minister Fredrik Reinfeldt said there was "more uncertainty" after the US decision.

Carmaker Volvo is owned by US auto giant Ford while Swedish-based Saab is owned by General Motors. Both US giants have posted huge losses and have said they were considering selling their Swedish subsidiaries.

Deputy Prime Minister Maud Olofsson expressed similar sentiments, noting that "some of these companies are in deep, deep trouble."

However, the Swedish government's 28-billion-kronor (3.4-billion- dollar) package presented on Thursday would remain in place, Olofsson told local media.

The package was aimed at securing the long-term viability of Swedish-based vehicle makers and included funds for a research and development centre as well as credit guarantees and rescue loans.

The Swedish vehicle industry including heavy-vehicle makers Volvo Trucks and Scania - along with subcontractors - is estimated to employ some 140,000 people. (dpa)