"As a rule we don't comment on market rumours," said Dierk Hartwig, the chief spokesman for Germany's largest bank. Bankers Trust has also declined to comment.

"I would not call these official talks, more exploratory talks," the newspaper quoted one source involved as saying. The Financial Times reported that a team of Deutsche executives, reporting to the bank's board, was leading the discussions with Bankers Trust. The newspaper added that the announcement of any deal was seen as some way off.

The talks, if confirmed, would underscore Deutsche's determination to join the global investment banking elite despite financial market turmoil which is battering earnings and threatens to lead a haemorrhage of jobs in the sector.

Bankers Trust has in recent years shifted its business to capitalmarkets and would provide Deutsche with a major U.S. operation and U.S. clients.

The U.S. bank could announce hundreds of job cuts as early as Thursday, when it is expected to report its worst quarterly results in more than three years.

Deutsche, too, recently warned that its profits had been hit by market turbulence and that its performance in the third quarter was "significantly" lower than expected.

But Deutsche's chief executive Rolf Breuer, a dynamic investment banker known in Germany as "Mr Financial Markets", has made no secret of his determination to proceed with a U.S. acquisition to plug gaping holes in the bank's corporate finance, mergers and acquisitions, and advisory businesses.

Last month he indicated Deutsche had stepped up a gear in its plans to expand in the U.S., saying it must make an purchase and can do so quickly if it found the right partner.

Breuer said any deal would be similar to the share swap used in the merger of Daimler-Benz AG and Chrysler Corp., enabling Deutsche topay for an acquisition in shares rather than cash.

All necessary steps for a such a purchase, including switching to U.S. General Accepted Accounting Principles (GAAP) and obtaining a U.S. listing, could be implemented in just six months, Breuer said.

Deutsche may have been spurred by reports that Frankfurt rival Dresdner Bank AG was in exploratory talks to buy PaineWebber Group Inc., the fourth-largest U.S. brokerage firm.

Deutsche's name has been mentioned in connection with an array of different U.S. banks in recent years including J.P. Morgan and Gldman Sachs.

Analysts said Deutsche's determination to buy a bank in the U.S. rather than rely on organic growth stems from high-level defections this year.

The FT reported that Deutsche had held talks with Hambrecht & Quist Inc., an investment bank with a strong market position in the technology sector. But those discussions had ended, the newspaper reported.