THE City is certain to see highly volatile share movements this morning after a series of weekend press reports that several high-profile mergers are to be announced this week or at least that exploratory discussions are under way.

Those in the frame included Asda merging with Kingfisher, Unigate bidding for food-to-housebuilding conglomerate Hills-down, Royal Bank of Scotland and Halifax in talks, and British Energy possibly bidding for a brace of North American nuclear utilities.

A spokeswoman for Asda denied talks were taking place between Britain's third-largest supermarket chain in terms of turnover and the Kingfisher retailing colossus about a #13bn merger.

There was confirmation from both sides that discussions had taken place in the last two weeks and ended without conclusion on Friday. However, these were concerned solely with co-operating on trading rather than forming what would have been one of Britain's largest retailing groups, with a combined turnover in excess of #14bn, Asda having the slightly larger proportion.

The discussions centred on whether the two could co-operate in certain areas. Out-of-town specialist Asda has a particular strength in clothing, with the George brand name ideally placed in the market to be sold through Kingfisher's Woolworth stores.

Kingfisher has a strong presence in electrical goods with its Comet chain, and this could be reinforced through Asda, while Superdrug would add substantial buying power to Asda's campaign against resale price maintenance for over-the-counter medicines, personal care products and perfumes.

However, analysts are sure to speculate over whether seeds have been sown for an eventual merger.

Before becoming chairman of Asda, Archie Norman was, from 1986 to 1991, finance director of Kingfisher. He went on to be chief executive of the then troubled supermarket group, and is a close friend of Kingfisher chairman Sir Geoffrey Mulcahy.

There would appear to be no serious regulatory problems if the two decided to join forces, something which would almost certainly be the case if Asda's chief executive Allan Leighton tried to merge with Safeway.

The Unigate food group did make an initial approach to Hillsdown earlier this year but never came near making an offer. The most attractive part of Hillsdown for Unigate is the chilled foods business, which is already destined for an independent existence if chief executive George Greener's plans are achieved.

He is aiming to hive off foods and the Fairview New Homes subsidiaries as separate companies. Hillsdown would retain the rump with groceries such as Typhoo Tea and Cadbury biscuits.

Unigate finance director John Worby refused to comment on speculation that he was about to launch a #1500m bid.

However, it would not be surprising if Asda and Kingfisher were

to issue statements to the Stock Exchange this morning confirming their discussions, with Unigate also indicating whether it has any intentions towards Hillsdown.

Royal Bank of Scotland said yesterday a newspaper report that tentative talks had taken place over dinner about a merger with Halifax were ''totally untrue''.

The article said that while the discussions had not been so advanced they could constitute merger talks, financiers were convinced the Royal was ready to do a deal if the right set of circumstances could be achieved.

A spokesman for the Royal said the dinner did not take place and added that the article was tendentious and unhelpful speculation.

Although there has been frequent speculation that Halifax was on the prowl for an acquisition, it is thought most unlikely it would be able to bid successfully for either the Royal or Bank of Scotland, given the rising strength of support for the SNP in the polls and the inevitably of a strong political backlash if either of these giants of the Scottish economy were to be threatened with the loss of their independence.

The Royal's chief executive Dr George Mathewson said recently there would be few synergies for anyone taking over either bank.

The relationship between Halifax and the Royal is on the cool side as a consequence of the rival offers for Birmingham Midshires. Halifax is prepared to pay #780m for the Wolverhampton-based building society, compared with the Royal's agreed bid of #630m.

However, the Royal has a binding agreement with Midshires that the building society cannot talk to anyone else about merger until the end of the year.

Meanwhile, British Energy refused to comment on suggestions that it intends returning as much as #400m of capital to shareholders later this year. The group's full-year results are due out tomorrow.

There is a growing conviction the Edinburgh-based nuclear generator is no longer quite so interested in the controversial Three Mile Island plant in Pennsylvania, which suffered the most serious breakdown of any nuclear utility in the US and clouded the industry's prospects for several years.

Instead, it may well be keen to acquire Nine Mile Point in New York State, which is owned by Niagra Mohawk.

However, the company was saying nothing yesterday.