Dow hits record as banks seek US deals
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Your support makes all the difference.SHARES ON Wall Street reached a record high of 9,374.27 yesterday after soaring 214.72 points on a new wave of merger mania.
After several weeks of climbing by steady increments, spurred in part by three consecutive rates cuts ordered by the Federal Reserve, the Dow Jones Industrial Average made its dramatic leap back into record territory as investors responded to merger news from several quarters.
The highest that the Dow had reached before yesterday was 9,367.84 on 20 July. Its previous record close was 9,337.97 on 17 July. As of last night, the blue-chip index was up an impressive 18 per cent on the year.
As recently as 8 October, the Dow had dropped to 7,500, down 4 per cent for the year. Even then, however, there was little panic among US investors who remained largely optimistic about the domestic economic outlook. But even a few weeks ago, few would have dared forecast that the Dow would come to regain all of its lost ground and in such a short time.
Contributing to the stock fever yesterday was confirmation by Deutsche Bank that it was in advanced merger talks with Bankers Trust.
Dresdner Bank chief executive Bernhard Walter gave a fresh twist to hopes of consolidation when he said the German bank was ready to follow its rival Deutsche into a big US deal.
Mr Walter, who was speaking on German radio as Deutsche confirmed it was close to agreeing a $9bn takeover of Bankers Trust, said that a large merger was "a very clear option".
Dresdner, Germany's third largest bank, was in talks earlier this year with PaineWebber, another US securities firm, although its interest more recently has been closer to home where it is said to be keen to merge with Societe Generale, the French bank.
In a joint statement issued to coincide with the start of New York share trading, Deutsche and Bankers Trust said that it was hoped that work on the deal would be completed in time to receive final approval at separate board meetings scheduled for this Sunday.
Staff at the City offices of BT Alex.Brown, Bankers Trust's securities operations, and Deutsche Bank were yesterday worried about their jobs.
BT's 2,400 London staff fear a repeat of the bloodbath that followed UBS's merger with Warburg.
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