Dresdner Bank AG was reported yesterday to be in talks aimed at acquiring PaineWebber Group Inc, a big US broker, in a bid to buy its way into the global investment banking elite.

Shares in Germany's second-largest bank fell more than 5 per cent as analysts said an acquisition, which would be the largest-ever foreign purchase by a German bank at an estimated price of $9 to $10 billion, may prove excessively expensive.

Both banks declined to comment on a report in business daily Handelsblatt which cited unnamed sources as saying Dresdner executives started talking to PaineWebber's management several weeks ago.

The newspaper reported that the talks were intensive but had not yet matured into formal negotiations.

"We cannot confirm or comment on the market rumour," Dresdner chief spokeswoman Gabriele Eick said. A PaineWebber spokesman in New York also declined to comment.

Speculation about a Dresdner acquisition of PaineWebber has been circulating for several weeks. The Handelsblatt report came as no surprise after Dresdner said repeatedly it was on the lookout for possible US purchases.

Analysts acknowledged that PaineWebber's large US retail presence and $300 billion of assets under management made it an attractive takeover target for Dresdner, giving it a large US distribution network in one fell swoop.

But many speculated that PaineWebber may prove too costly to warrant the outlay and could be tougher to integrate than Kleinwort Benson, the British investment bank Dresdner bought in 1995 for one billion pounds sterling.