The Dow Jones closed at a record high of 9,374 after the merger mania hit markets sending shares through the roof.

Merger talks among major financial and technology companies pushed the blue chip industrial index to finish up 214 points or 2.29% by the close of trade.

The previous record close was 9,337.97 on July 17. The highest the Dow had ever reached before today was 9,367.84 on July 20.

Meanwhile, the technology-laden Nasdaq index closed up 49.21 points to finish at 1,9711.18.

The technology markets soared with news that America Online (AOL) was in talks with Netscape Communications about a potential takeover which could transform the Internet industry.

The takeover would value Netscape at around $4bn, and may be concluded imminently.

AOL shares rallied 89.05 points, Sun Microsystems rose up 71points, Netscape was up 41 points and even Microsoft was up 119 points.

Meanwhile Deutsche Bank, Germany's largest bank, set its sights on achieving a presence on Wall Street.

It confirmed it is close to reaching a deal to buy Bankers Trust, the eighth largest bank in the US, for $10bn (£6bn) in cash.

The deal would create the world's largest banking group in terms of assets, with $840bn, making it bigger than the recently merged Citigroup and the Swiss group UBS.

It would also be the largest takeover by a foreign financial institution in the US.

As recently as October 8, the Dow was under 7,500.

The recovery has lifted the Dow to a gain of more than 1,450 points, or more than 18% for the year, well above what analysts had predicted as 1998 began.

Leading European markets all had strong showings, while markets in Japan were closed for a holiday.