The paper said that the job cuts would accompany quarterly results and about 400 staff are expected to go in London, mainly in fixed interest and emerging markets operations as well as back office functions.

It said suggestions last week that there would be big cutbacks in the equities operation, which embraces the former Smith New Court business taken over in 1995, "are incorrect".

Merrill said last week no final decisions had been made regarding lay-offs, and declined to comment on a report which said the bank had decided to slash 2,000 posts, or around five per cent of its workforce, excluding brokers.

Merrill has already told its employees to cut back on travel and entertainment expenses and said it lost about $135 million net from emerging markets in July and August.

The firmemploys over 60,000 people in 45 countries.