Pharmaceuticals giant SmithKline Beecham, which yesterday announced it was in merger talks, saw an £8 billion sterling swing in its stock market value as 22 million shares exchanged hands in a dealing frenzy.

Shares see-sawed from an early high of 814 1/2p to a close of 3p down at 740p after the company revealed talks with healthcare group American Home Products.

This initially saw its market worth rocket £4 billion to £45 billion on hopes of a possible deal to create the world's second largest drugs group.

But it slumped by the close of the session after dealers said American Home Products had "gone through the roof" on the US market, meaning if SmithKline was to bid for the company it would have to pay more.