Merrill stock up on investor talk

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Merrill Lynch shares have risen on a report that a foreign investor may pump up to $5bn (£2.5bn; 3.47bn euros) into the bank.

Shares added 2.2% or $1.19 to $55.69 on hopes that this could cushion it from losses linked to the credit crunch.

Singaporean investor Temasek Holdings may invest up to $5bn in the American bank, the Wall Street Journal reported.

Foreign investors have put cash into US banks who have declared losses linked to the US sub-prime crisis.

On Thursday, Morgan Stanley revealed a bigger-than-expected write-down of assets and sold a $5bn stake to a Chinese sovereign wealth fund.

Global losses

A string of global banks have unveiled losses as a result of their exposure to investment products linked to US sub-prime mortgages.

So far announced losses have totalled about $80bn, but the final toll might be much higher.

Analysts indicated they would welcome an investment in Merrill.

"We suspect (Merrill's) current capital position is adequate from a regulatory standpoint, but...its position is likely not sufficient from an industry competitive standpoint without a deal," Wachovia Capital Markets' analyst Douglas Sipkin said in a note to clients.

Merrill Lynch recently appointed the boss of the New York Stock Exchange, John Thain, to be its new chief executive.

He replaced Stan O'Neal, who left after the bank was forced to admit a $7.9bn exposure to bad mortgage debt.

Merrill Lynch's shares have been weak since the firm disclosed larger-than-anticipated losses from mortgage-backed investments, a revelation which effectively led to Mr O'Neal's departure.