City firm Herbert Smith has knocked global giant Clifford Chance off the top spot in the European mergers and acquisitions (M&A) market for the first quarter of 2004, despite not having appeared in the top ten for several years, figures revealed this week.

But the data, compiled by analysts Mergermarket, showed that M&A work overall is on a downward trend in Europe so far this year, in contrast to the North American market.

Herbert Smith, ranked with its German ally Gleiss Lutz and its Benelux partner Stibbe, completed 23 deals worth a total of 75 billion (50 billion) in the first three months of 2004.

City firm Freshfields Bruckhaus Deringer came a close second with 73 billion from 35 deals.

Clifford Chance topped the table for volume of deals, acting on 37 transactions worth a total of 72 billion, while City firm Linklaters advised on 35 deals worth a similar total value.

Magic circle firms Allen & Overy and Slaughter and May were unusually absent from the list of top firms by volume, because they did not act on Sanofi-Synthelabo's hostile bid for Aventis in the pharmaceutical sector, which bolstered the figures of 16 law firms.

Herbert Smith advised Merrill Lynch, the investment bank representing the bidder.

Four US firms featured in the European top ten by value.

Sullivan & Cromwell led the US pack with

73 billion total deal value in only nine transactions.

French firms also performed well, with Bredin Prat and Darrois Villey Maillot Brochier both in the top ten.

City firm Ashurst topped the UK table by value, while Eversheds came first by volume.

Caroline Goodall, head of corporate at Herbert Smith, said: 'So far this year the trend has been for more complicated deals, with purchasers buying stakes in companies rather than buying 100%.

I expect to see a lot of activity in the financial services and telecoms sectors, and there should be some things coming out of the travel sector - whether airlines or travel generally.

'The market is gradually recovering and building in confidence, but it could easily be shaken up by events such as the terrorist attack in Madrid.

If there was an attack in the UK, that would have a big effect on the European market.'

Rachel Rothwell