Last week was an unnerving time for deal makers. Stock markets swooned. Interest rates around the world climbed higher, threatening to tighten the spigot of cheap credit that has made so many buyouts possible. And government officials in Washington and London took steps toward raising taxes on the buyout kings of private equity.

Global merger volume fell last week to its slowest pace since late January, according to Thomson Financial. There were 508 deals worth a total of $44.9 billion last week, compared with the busiest week this year, late April, when there were 799 deals valued at a total of $199 billion.

So what's the talk of the market today? More deals, of course.

Shares of Alcoa rose 2 percent in early trading after the Times of London reported that BHP Biliton, the British-Australian mining giant, was considering a possible $40 billion bid for the company. The newspaper says that while BHP had weighed a bid before, the idea is supported by Marius Kloppers, who will replace Chip Goodyear as chief executive this fall. Alcoa is involved in its own takeover effort to acquire rival Alcan.

Wendy's International said that it would explore a sale of the company, which has a market value of $3.4 billion.

The New York Times is reporting that Cadbury Schweppes is expected to announce on Tuesday the winning bidder for its American beverage business, which includes 7-Up, Dr Pepper and Snapple. Cadbury has received at least three bids - from two private equity groups and from Cott of Canada -- worth nearly $16 billion, the Times says.
And there is the possibility of a bidding war erupting for Dow Jones: a number of reports say that General Electric has been talking to Pearson about making a joint bid.

These developments underscore that despite the storm clouds, the environment for deals remains very favorable. Interest rates are still historically low, the stock market is up for the year and there are a number of industries ripe for further consolidation.

Furthermore, merging companies can expect friendly regulatory vetting in Washington at least through 2008. And all that cash that private equity firms have raised will need to go somewhere.

For deal makers, the good times may not be quite as good as they were a year ago and the growing public spotlight may make them squirm, but this boom has some way to go yet.