U.S. merger volume hits record despite soft June

By Jessica Hall

PHILADELPHIA, June 28 (Reuters) - Merger activity in the United States hit a new record in the first half of the year, fueled by deep-pocketed private equity firms and low borrowing costs, even as the pace of deals began to slow in June, investment bankers said on Thursday.

The U.S. broke through the $1 trillion level for total mergers, marking the first time that mergers have hit that level in the first six months of any year, according to research firm Dealogic.

So far this year, U.S. merger volume totaled $1.005 trillion, up 36 percent from the same period a year ago. The number of deals, however, dropped 12 percent, Dealogic said.

April was the busiest month of the year in the U.S., with $210.5 billion in deals, while June was the slowest month with $124.2 billion in deals, Dealogic said.

"It doesn't look like the world is ending to me. No one has put their pencils down," said Stefan Selig, global head of mergers and acquisitions at Banc of America Securities.

"The market's return to more sane levels is generally a good thing. It's not something we're unhappy about," Selig said.

Several factors combined to make the normal summer slowdown appear to arrive earlier than usual, banker said.

Losses at hedge funds managed by Bear Stearns Cos. BSC.N, as well as the specter of rising interest rates and weakness in the subprime mortgage market caused some dealmakers to take a step back, bankers said.