WASHINGTON — CIT Group's inability to get emergency government funding drew a muted reaction from investors, suggesting the commercial lender's possible failure won't have widespread economic consequences.

CIT said late Wednesday negotiations with regulators about a possible rescue had broken off after days of round-the-clock talks, raising expectations that the New York-based company will file for bankruptcy. The move marked a defining moment for the Obama administration and showed it is drawing a line in the sand on federal rescues for troubled financial firms.

Investors seemed unfazed by the news. Futures on the Dow Jones industrial average and the Standard and Poor's 500 index dipped on the announcement but quickly stabilized. Overseas, Asian stock markets rose sharply following Wall Street's surge earlier Wednesday. The Dow Jones industrials finished the day up 257 points.

The muted response to CIT's woes suggests investors are more focused on signs that the economic slump might be easing, said Paul Baiocchi, senior market strategist at Delta Global Advisors in San Francisco.

"The market may simply scoff at this news," Baiocchi said. "We're seeing more optimism with the earnings outlook this quarter, so that could outweigh CIT's problems."

CIT's small size relative to other big commercial banks also might ease worries of a ripple effect. Though a major lender to small and midsize U.S. business with about a million clients, CIT is one-eighth of the size of Lehman Brothers when massive credit losses forced the investment bank into bankruptcy last fall.

CIT also had begun cutting back on lending in recent months, diminishing the risk a possible bankruptcy could cause significant damage to the broader economy. The lender had $5.3 billion in credit lines to customers as of March, down from $6.1 billion at the end of 2008.

"That shows they were pulling back and should lessen the immediate blow of this," said Kathleen Shanley, an analyst at corporate bond research firm Gimme Credit.

And neither, it seems, does the Obama administration's financial rescue program, headed by Treasury Secretary Timothy Geithner. By withholding aid, the administration is betting CIT's likely failure won't pose a critical risk to an economy weighed down by rising unemployment.

CIT, which got $2.3 billion of bailout money in December, has warned depriving it of more federal aid could imperil about a million corporate borrowers — from Dunkin' Donuts franchisees to retailer Dillards.

The Bush administration paid a price for its decision not to save Lehman Brothers, whose collapse helped spark the financial crisis last fall.

With its assets deteriorating and dangerously little cash on hand, the news left CIT with few options outside of bankruptcy.