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U.S. energy giant Exxon Corp. is close to a takeover deal with Mobil Corp., the second largest U.S. oil company, Britain's Financial Times reported today.

Citing sources close to both companies, the newspaper said the negotiations were at an advanced stage and an announcement could come early next week.

If successful, it would be the largest industrial merger and possibly the largest ever in any sector, the newspaper said.

Exxon and Mobil officials declined to comment.

The Financial Times said Exxon was being advised by J.P. Morgan and Mobil by Goldman Sachs. Both investment banks declined to comment. Financial terms of the deal could also not be established, although it seemed likely to be an all-stock transaction.

The takeover would boost Exxon's position as an industry leader following the planned takeover of Amoco Corp by British Petroleum Co Plc. BP Amoco will form the world's third-largest publicly traded oil company.

Mobil has held talks with a variety of potential industry partners and came close to a refining and marketing deal with Amoco, but that never came to fruition.

Earlier, New York analysts said Exxon and Mobil could face difficulties in overcoming regulatory hurdles in the U.S. and Europe. The consolidation of the two oil giants would reunite two pieces of the Standard Oil Trust empire torn apart by the Supreme Court in 1911.

With market capitalizations of $64 billion for Mobil and some $54 billion for Chevron, any merged company would rank alongside BP-Amoco. It would be able to cut costs dramatically -- key for survival in an industry that has seen profitability massacred by the 40 percent drop in oil prices from a year ago.

Mobil gained $3.43 3/4 Wednesday to close at $78.37 1/2 on the New York Stock Exchange, where Exxon was unchanged at $72.68 3/4 .

Hoechst, Rhone-Poulenc in talks

FRANKFURT, Germany (AP) -- Confirming weeks of speculation, German drug and chemical maker Hoechst said Wednesday that it was discussing a merger with Rhone-Poulenc of France, a union that would create one of the world's largest pharmaceutical companies.

An announcement on the outcome was expected as early as next week, but Hoechst cautioned that "no guarantee can be made as to the outcome of the current discussions."

Analysts projected that drug sales of the combined company would outstrip those of leaders Glaxo Wellcome of England and Merck & Co. of the United States. Hoechst's annual sales are estimated at $13.75 billion, and Rhone-Poulenc's at $11 billion. The two companies together employ 180,000 people.

Mortgage rates fall this week

WASHINGTON (AP) -- The average interest rate on 30-year fixed-rate mortgages fell to a five-week low of 6.78 percent this week, Freddie Mac, the mortgage company, said Wednesday.

The decline, from 6.86 percent a week earlier and a three-month high of 6.93 percent two weeks earlier, followed last week's reduction in short-term interest rates by the Federal Reserve.

Fifteen-year mortgages, a popular option for refinancing, averaged 6.44 percent this week, down from 6.51 percent.

On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.54 percent, up from 5.52 percent.

The rates do not include points.

IMF chief sees global crisis easing

MADRID, Spain (AP) -- Michel Camdessus, director-general of the International Monetary Fund, said Wednesday that the worst of the global financial crisis is over, a Spanish news agency reported.

Camdessus said it was possible to avoid a global recession, although the risk hadn't completely disappeared because "the treatment has only just started."

"To those frivolous commentators and prophets of doom who've been chronicling the death foretold of the Brazilian and Latin American financial system, I say today what I said yesterday: The Latin American domino won't fall," the agency quoted Camdessus as saying.

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