Donald Trump says he has had a "very good" phone call with Xi Jinping amid their ongoing trade war, during which they agreed to more tariff talks.
The investment giant lined up to rescue Thames Water abandoned its offer days after talks took place involving one of its co-founders and Downing Street officials.
Sky News has learnt that Henry Kravis, one of the architects of KKR's ascent to becoming one of the world's most powerful investors, discussed its plan to bail out Britain's biggest water company with Varun Chandra, Sir Keir Starmer's top business adviser, over the weekend.
Sources close to the now-abandoned deal said the call between the pair had been organised following a request from Thames Water and its advisers at Rothschild.
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An insider said the discussion had been "constructive", with Mr Chandra said to have sought to reassure Mr Kravis that the government was supportive of the deal.
One source close to KKR said, however, that its senior New York-based executives were unable to get comfortable with the level of operational and financial risk attached to investing as much as £4bn of equity into Thames Water.
They were also concerned about negative rhetoric directed at Thames Water and the rest of the industry in recent weeks by Steve Reed, the environment secretary, and other ministers, the source added.
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KKR's decision to pull out of the discussions leaves the water company, which serves more than 15 million customers across London and the Thames Valley, relying on an alternative deal being assembled by its biggest bondholders.
That proposal is being progressed, Thames Water said on Tuesday, although the spectre of temporary nationalisation continues to loom over it.
The company was fined a record £123m by Ofwat, the industry regulator, last week, and faces further substantial penalties in the coming months.
KKR has been contacted for comment.
