Investment bank Merrill Lynch, which has accepted a takeover offer from Bank of America, is set to wield the axe in its trading division, with some 500 jobs said to be on the line.

The cuts could be made as early as this week and are just the beginning. Chief executive John Thain said the bank needs to cut thousands of jobs because he expects a global recession next year.

Insiders say sales staff and traders in the fixed-income and equity divisions are to be targeted first.There was no indication whether the job losses would be in the US or elsewhere.

Thain will head investment banking, securities and wealth management divisions when the banks merge.

The current cuts are about 1% of Merrill's 60,900 employees. This week's cull comes on top of thousands more Thain expects after the merger closes later this year.

Merrill has already axed 4200 jobs this year after reporting five straight quarterly losses totalling $23.8 billion (£13.85 billion). It last week posted a $5.15 billion loss for the third quarter, mostly from writing down mortgage bonds and other securities held by the fixed-income trading department.

Meanwhile, Barclays has hired about 100 people in Japan to expand its equity business in Asia. Most of the new staff came from failed investment firm Lehman Brothers' Tokyo office, including Kazutoshi Ohkubo and Koichiro Chiwata, who will be managing directors, Barclays Capital Japan said.