Merrill Lynch has called off a planned investment banking joint venture with China's Huaan Securities after it failed to get government approval, sources close to the deal said on Tuesday.

Merrill Lynch has decided to scrap the proposed partnership in China and was now in talks with other Chinese brokerages for a similar plan in the world's fastest growing major economy, the sources said.

In January 2005, Merrill Lynch said it would put up about $32 million for a one-third stake in a new investment banking venture with mid-sized Huaan Securities.

The venture was expected to allow Merrill Lynch to underwrite domestic stocks, trade bonds and advise companies on mergers and acquisitions, pending government approval.