COMPANIES around the world are still reluctant to go on the acquisition trail even though they are becoming more confident about the global economy, a survey found yesterday.

In its half-yearly assessment of the intentions of big companies, accounting and consultancy firm Ernst & Young said the growing optimism has yet to be translated into more investment or corporate deal-making. The survey was based on responses from 1,600 senior executives in 50 countries and regions, 85 percent of which had annual revenues of above US$500 million.

Ernst & Young found that 51 percent of the executives questioned think the global economy is improving - more than double the level recorded last October. Under normal circumstances, that would normally translate into companies feeling more confident to splash out on mergers and acquisitions. But the survey only found that 29 percent of companies expect to do a deal in the coming year.

When asked how they would expand the business if they had enough cash, 45 percent said they would sooner invest in-house than buy up another organization.

"The current situation can best be described as a 'confidence paradox,'" said Pip McCrostie, global head of transactions at the firm. "In the past few years, global M&A volumes have de-coupled from historical indicators ... Executives are continuing to wait for a sustained recovery before engaging in M&A."

Despite the occasional big deal, such as the merger of commodities trading group Glencore International PLC and mining firm Xstrata PLC and the US$25.5 billion bid for Sprint Nextel Corp by satellite TV company Dish Network Corp, the amount and value of corporate deals are still down on the levels that existed before the start of the financial crisis in 2007-2008.

The crisis paved the way for the deepest global recession since World War II, that saw bankruptcies rise and turned many executives risk-averse - pushing them to cut their debt levels and increase the amount of cash they held.

The recovery since the start of the crisis has been patchy with many regions, including much of Europe and Japan, still struggling to show any economic growth.

Even so, there are some bright spots, according to the survey. In Brazil, the firm found 45 percent of executives there plan to make a deal over the coming year. That compares with 29 percent in the US, 27 percent in the UK and 12 percent in Russia.

The survey found that China remains the number one investment spot, followed by India and Brazil. The US, the world's largest economy, is also in the top five along with Canada.