After weeks of speculation, Paramount has officially confirmed that it has pulled the plug on its film adaptation of Watchmen, Alan Moore's celebrated graphic novel.

According to the trade paper Variety, producers Larry Gordon and Lloyd Levin are taking the project, with British director Paul Greengrass (The Bourne Supremacy) attached, out to other studios.

Budgeted at $120m (£64m), Watchmen was to have started shooting at Pinewood Shepperton this summer, but Paramount was reported to have been put off by an unfavourable exchange rate and a continued uncertainty over government tax breaks for big-budget foreign productions.

Watchmen had come under heavy scrutiny in the wake of new studio chief Brad Grey's surprise move to replace Donald De Line with Gail Berman as studio president in late March.

As reported previously, it is estimated that the decision will cost Pinewood about £2.2m in lost revenue. The studio said that it "will seek to procure alternative customers ... but is unlikely to be able to recover all the anticipated shortfall".