JCDecaux, the French advertising group, on Tuesday abandoned exclusive talks with Rupert Murdoch over the purchase of his emerging markets billboard business, citing market conditions.

"Both companies recognise that economic and capital market conditions have made it increasingly difficult to conclude strategic partnerships on this scale," JCDecaux said in a statement.

The scrapping of the planned $1bn-1.5bn cash and shares deal deprives Mr Murdoch of an exit route from a predominantly Russian investment that has been dogged by political uncertainly. He will also need to look for other means to fund the possible expansion of his pay-TV interests in western Europe.

A deal would have seen JCDecaux overtake Clear Channel as the world's largest outdoor advertising business.

JCDecaux's share price rose by 7 per cent in mid-morning trading.

Its stock price fell by 11 per cent between the announcement of talks over NewsOutdoor, the billboard business, and the close of trading on Monday. Over the same period, shares in NewsCorp, Mr Murdoch's holding company, have fallen by 29 per cent.

Newscorp opened exclusive talks with JCDecaux a month ago over the sale of NewsOutdoor in return for cash and a stake in the French outdoor advertising group.

Proposals under discussion would have seen News Corp receive most of the $1bn-plus proceeds for its 73 per cent stake in NewsOutdoor in stock, giving it a stake of less than 10 per cent in JCDecaux.

Mr Murdoch in August indicated that his desire to withdraw from the Russian market was driven in part by political concerns.

"The more I read about investments in Russia, the less I like the feel of it," he said. "The more successful we'd have been, the more vulnerable we'd be to having it stolen from us. Better we sell now."