Spending on online advertising in the US decelerated sharply even before the financial crisis of recent weeks, according to figures released on Tuesday, denting hopes that the main source of cash for the consumer internet economy would remain largely resilient in a recession.

The rate of growth of online shopping has also declined sharply, as pressure on disposable income has led consumers to cut back online purchases of items such as jewellery, watches and music.

The figures, from the Interactive Advertising Bureau, suggest that though the long-term shift of advertising and commerce online is set to continue, it could prove to be more vulnerable to an economic downturn than many had hoped.

In the second quarter of this year, US online advertising spending rose 12.8 per cent to $5.7bn, according to the IAB. That is a slowdown from the 18.2 per cent growth of the preceding three months and the 25 per cent of 2007.

Even with the crisis, most analysts had been expecting 2008 to bring growth of 17-20 per cent but those figures now look out of reach.

The pressure will be felt by the many internet groups set up in recent years that are only starting to turn their thoughts to how to make money from their internet audiences, according to Silicon Valley financiers.

Even though online advertising is expected to hold up better than advertising in traditional media, fears of a sharp deceleration have already prompted a retreat by internet investors who had been hoping for continued buoyant conditions.

Google's shares on Tuesday fell below $350 for the first time since early 2006, a decline of more than 50 per cent from their peak, even though search engines have registered less of a slowdown than display and video advertising.

Yahoo, the largest display advertising company, fell another 2 per cent to $14.99.

E-commerce growth fell to 9 per cent in the second quarter, down from 13 per cent in the first and 19 per cent in the final three months of 2007.

Additional reporting by Kevin Allison in San Francisco