LONDON - David Cameron and Nick Clegg joined forces tonight to calm jittery financial markets, putting economic stability and reduction of the deficit at the heart of their negotiations for a power-sharing deal.

Senior Tories and Liberal Democrats spent more than six hours locked in a conclave in the Cabinet Office negotiating an agreement that would put the Tory leader into No 10.

As they were talking, Mr Clegg held a face-to-face meeting with Gordon Brown, who returned to Downing Street after a night in Scotland to find power ebbing away.

William Hague, Mr Cameron's effective deputy and leader of a four-strong Tory negotiating group, said this evening that the talks with the Liberal Democrats had been "very positive and productive" and the two sides would meet again in the next 24 hours.

Mr Hague listed a series of issues that had been addressed, first among them the thorny issue political reform - many in Mr Clegg's party are demanding an end to the first-past-the-post system.

The two groups also discussed banking reform, civil liberties and the environment, although — with a clear eye on the financial markets — Mr Hague said that economic stability and the reduction of the deficit would be the "central part" of any agreement.

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