Traders speculated that Deutsche had offered to buy JP Morgan for $175 a share, valuing the US bank at $30bn. Shares in Deutsche were as high as DM5.7 at one point in the day - a gain of 4.4 per cent - while JP Morgan shares jumped $7 7/16 to $124 1/4 when the New York Stock Exchange opened for business.
The rumours were sparked by an article in Business Week magazine, which reported that JP Morgan was in merger talks with a "much larger European bank". Deutsche Bank is known to be on the look-out for an acquisition in the US, where it has suffered high-profile defections in recent months.
One analyst said: "The rumours have been around long enough to make me think there has been some high-level contact between the two, but I don't think anything is imminent."
Analysts said there was a good strategic fit between the two banks, although it could be hard to integrate the cultures.
Deutsche has well-developed bond and equity divisions, but has struggled in corporate finance and advisory and is widely seen as being weak in the US. JP Morgan has an established US presence and a thriving corporate advisory business.
A JP Morgan spokesman said: "We've heard this rumour before. It's been around for some time. We did not comment on it then, and we're not commenting on it now." A spokesman for Deutsche Bank also declined to comment.Reuse content