Merrill Lynch, which has been accused of issuing biased stock research, has reached a partial settlement but still has to agree on a payment for a final accord.

Merrill has agreed with the New York state attorney general Mr Eliot Spitzer to disclose potential conflicts of interest on its research reports.

Now, the key issues are money and potential changes to how Merrill runs its research department.

Mr Spitzer has not ruled out bringing criminal charges if the two sides do not arrive at an agreement.

"Negotiations continue relating to the broader investigation: particularly, structural issues pertaining to the oversight of research as well as any potential monetary settlement," Salomon Smith Barney analyst Mr Guy Moszkowski said in a research note on Friday.

Merrill has called the $100 million (€112 million) sought by Mr Spitzer unacceptable. Talks between the two sides hit a snag over the payment amount and may spill over to next week, the Wall Street Journal reported yesterday.

Merrill's rivals will be keeping a close eye on the final resolution. Mr Spitzer has subpoenaed other top Wall Street firms, including UBS Warburg, Morgan Stanley and reportedly Citigroup unit Salomon Smith Barney and Credit Suisse First Boston.

Analysts and legal experts have said the other firms will assess the severity of the Merrill settlement and decide how to respond to Mr Spitzer.

The companies will likely seek to avoid the bad publicity and stock decline Merrill suffered as a result of the probe, experts said.

"If it's a comfortable (agreement) ... I think you'll find other investment banks lining up" to settle, Prof Donald Langevoort, a securities law professor at Georgetown University, said on Thursday.

"If it's a tougher pill to swallow, everyone (will) have to work out their own individual strategy."

Merrill's partial agreement, announced on Thursday evening, means it will eventually disclose its investment banking relationships on all of its research reports.

It would also detail the percentage of different ratings it had on companies covered by its analysts.