United Kingdom:Investment bankers cleaned up as deals of every type - agreed, hostile, leveraged and cross-border - hit record levels, writes Fiona Walsh

This year has been the year of the deal. Agreed, hostile, leveraged or cross-border, whichever way they came, the avalanche of activity has made the past 12 months the biggest year for mergers and acquisitions since the dotcom fever of 2000.

In global terms, the total value of takeovers in 2006 surged to an all-time high of $3,611 billion, (€2,751 billion) according to figures from Thomson Financial, outstripping the $3,400 billion record set six years ago at the height of the dotcom boom.

Even in the traditionally quiet week before Christmas, an astonishing $90 billion of acquisitions were unveiled around the world in the space of just 24 hours, led by the $29 billion takeover of Norway's Norsk Hydro by Statoil.

The M&A frenzy has been driven by the huge buying power of powerful private equity players such as Blackstone, Kohlberg Kravis Roberts, Permira and Texas Pacific. Private equity funds are stalking ever-larger targets and are increasingly willing to join forces on deals to enhance their already substantial fire-power.

But corporate dealmakers have also stepped up their activity, backed by buoyant earnings and the availability of cheap financing - and a new determination not to allow the private equity boys to take all the prizes.

The invasion of the foreign buyer has been a recurring theme in the London market over the past year, with overseas bidders snapping up UK companies at a rate that looked alarming to all but the most liberal of free trade enthusiasts.

Some of the largest deals of 2006 in the UK were pulled off by foreign companies, with the biggest being the private-equity-backed takeover of airports operator BAA by the Spanish construction group Ferrovial, a deal worth just over $30 billion. Another Spanish bidder, Iberdrola, was successful in a $26.6 billion offer for Scottish Power.

Just a couple of months earlier, Britain's biggest water company, Thames Water, changed one overseas owner for another when a consortium led by the Australian bank Macquarie (which failed in its attempt to buy BAA) bought the business from Germany's RWE for almost $15 billion.

The Thames and Scottish Power deals highlight the worldwide scramble for once-unglamorous infrastructure and utility assets, which are now prized for their stable, long-term earnings.

Other British names to have come under foreign ownership this year were BOC, which accepted a $15.4 billion offer from Linde of Germany; and Gallaher, the Benson & Hedges and Silk Cut cigarettes group, which is being bought by Japan Tobacco for $18.8 billion.

At the other end of the scale, Dame Anita Roddick's ethical beauty retailer Body Shop somewhat surprisingly accepted a £125 million offer from the French cosmetics giant L'Oreal.

This year has also seen a resurgence of hostile deals. According to the Thomson data, there was a record 157 hostile deals in 2006, worth a total of almost $500 billion, almost one-third of which were for UK companies. These included the $5.1 billion bid from the American exchange Nasdaq for the London Stock Exchange, which LSE chief executive Clare Furse is fiercely resisting.

The unprecedented pace of deals this year - and the mountain of debt taken on to finance them - has raised fears that the markets have reached their peak and could be heading for a rerun of the dotcom bust.

But most M&A analysts are predicting continued activity into 2007 and stress that the foundations of this particular boom are far more solid than those of the boom of six years ago.

The internet has figured in this year's crop of deals, as the major media players attempt to latch onto the craze for "community" sites such as MySpace, now part of Rupert Murdoch's empire. Other deals have included the $1.65 billion Google takeover of YouTube, the popular video site.

Then there were the deals that were not done - cable company NTL was thwarted in its bid to take over ailing broadcaster ITV when James Murdoch pulled off a master stroke by snapping up an 18 per cent stake in the business.

ITV, which had rebuffed private equity approaches earlier in the year, staged its own coup by luring the BBC's Michael Grade to be its new chief executive.

Also escaping private equity clutches was EMI, the world's largest music publishing business, which rejected a £2.5 billion takeover bid from Permira.

Other bid battles remain unresolved and will rumble on into the new year.These include the ongoing $14.3 billion battle for Corus, the old British Steel group.

Meanwhile, the M&A frenzy has ensured a bumper bonus season for City of London investment bankers in 2006 - and that is a recurring theme of every year.

Fiona Walsh writes for the Guardian in London