August's $200-billion in takeover announcements is unlikely to provide enough of a spark to

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energise equity markets fretting about another dip in global growth.

At best, the M&A revival -- fuelled by rock-bottom interest rates, cheap stock valuations and big company warchests -- will help limit stock market losses as fund managers scramble to fill portfolios with shares of potential targets.

And the flip side is that the prospect of enhanced M&A activity could raise fears of more job losses and questions about whether dealmaking is driven by worries over future product demand, contributing to investor unease.

S&P 500 companies, which have been aggressively slashing costs to weather the economic slowdown, closed last quarter with $1.63 trillion in cash holdings, the highest for any quarter on record, according to Thomson Reuters Worldscope.

"Companies' balance sheets have rarely been so flush with cash," said Alain Bokobza, head of global asset allocation at Societe Generale CIB in Paris.

These companies, struggling to boost revenue in an anaemic economic environment, are making waves in what is usually one of the quietest months of the year for M&A activity.

According to Thomson Reuters data, nearly $200 billion in mergers and acquisitions has been announced in August, already making it the third-best month so far this year in terms of money committed to deals.

The top bids include BHP Billiton's $39-billion hostile offer for Canada's Potash Corp, Intel Corp's $7.7-billion offer for McAfee Inc and Vedanta Resources' $9.6-billion stake purchase in Cairn India.

Comparatively, the $1.5 trillion spent in M&A from the start of the year to August 23 is 20.6 percent above last year's amount. But it's over 50 percent less than the $3.1 trillion spent in the same period of 2007, when global stock markets were on their way to historic highs.

The MSCI world equity index has dropped 7.1 percent so far this year, hurt by a slowdown in the global economic recovery and by the euro zone's sovereign debt crisis.

DEALS CAN'T COUNTER FEAR

But while the M&A revival is seen continuing at a steady pace, analysts said it won't eclipse the mounting global economic fears that have trapped stocks in a range and propelled government bond yields to record levels.

"For now, the dominant factor on the market remains the U.S. and Chinese slowdown in growth," Societe Generale's Bokobza warned, pointing that the M&A wave has been mainly confined to the tech and resource-related sectors.

The relatively small number of deals in August, despite their big price tags, is also fuelling caution among analysts.

Data showed there were 1,863 deals globally in August until last Friday, compared with 2,961 deals in August 2009 and 3,067 deals in August 2008.

"When you look closely, there hasn't been a lot of deals apart from the ones that hit the headlines," said Jacques Henry, analyst at Louis Capital Markets in Paris.