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Andersen-KPMG merger talks collapse

Talks to merge embattled accounting firm Andersen's non-US operations with KPMG have collapsed, a source close to the negotiations said on Tuesday.

The talks broke down after Andersen Spain, seen as key to the KPMG deal, opted to merge instead with rival Deloitte & Touche, the source said.

Andersen in Latin America is now expected to join with Deloitte, while Singapore, Philippines, Malaysia, Taiwan look set to merge with Ernst & Young, he said.

Andersen has been indicted in the Unites States for its role as auditor of collapsed energy trader Enron. It faces billions of dollars in lawsuits and has suffered a mass exodus of US clients.

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