(March 8 – 11:50 ET) – Canadian investment bankers insist that their deal volume is still strong, but the Financial Times is reporting that global merger and acquisition volumes are down by more than 60% this year.

Citing fresh data from Thomson Financial, the FT reports that the volume of M&A deals announced in the first two months of this year is only US$309.6 billion, down from US$818 billion in the period last year. In three months ended February 28, global M&A volumes fell 52.5%.

The FT attributes the weakness to fear about the U.S. economic slowdown and its possible impact on other economies. The crash in tech stocks, one of the M&A industry’s key sectors, also isn’t helping.

“There is a lack of confidence among CEOs and it is difficult to be clear about valuations with the markets in turmoil,” says Guy Dawson, chairman of European investment banking at Merrill Lynch.

The big question will be how this slowdown hits the investment banks themselves. Already Goldman Sachs, Credit Suisse First Boston and Bear Stearns have announced significant layoffs. In this case the relative lack of success by Canadian dealers in penetrating the U.S. market could be a saving grace, as the U.S. is expected to suffer most.

In the U.S., M&A volumes fell 35% in December year-over-year, 78.5% in January and 56% in February. European volumes rose 17% in December, dropped 49% in January and dropped another 12.5% in February.