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E*Trade Shares Up as Deal Talk Returns

E*Trade shares surged on Thursday as talk about potential takeover interest on TD Ameritrade's part surfaced again, causing volumes to spike.

NEW YORK (TheStreet) -- It's the deal that won't die.

Shares of

E*Trade Financial

(ETFC) - Get E*TRADE Financial Corporation Report

were surging late Thursday morning as takeover talk involving the online broker bubbled up again. The chatter was stoked by comments

TD Ameritrade

(AMTD) - Get TD Ameritrade Holding Corporation Report

CEO Fred Tomcyzk made to


that the company is


about using its cash for either an acquisition, share buyback or dividend payout.

If that sounds familiar, it's because it's almost exactly what Tomczyk

said back in November 2009

, that time at an industry conference sponsored by


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When asked specifically about E*Trade, Tomcyzk gave an answer in this most recent interview that was very similar to what he said last time around; that TD Ameritrade would be interested in any deal that makes "strategic and financial sense." In November, his comment was that any deal involving E*Trade would have to be on the "right terms with the right structure."

E*Trade's stock was rising 7.7% to $1.83 in recent trades. Volume of 62.4 million was already well above the issue's trailing three-month daily average of 37.8 million, so traders are definitely running with the comments. The move above $1.80 was the stock's first since Jan. 20.

Still, there's no reason to believe that TD Ameritrade is any closer to making a play for E*Trade now than it's ever been. Tomczyk allowed that E*Trade appears to be making progress cleaning up its balance sheet, which is weighed down sour home-equity loans, saying they were on "better footing" than they were a year ago. But he didn't say the company was out of the woods.

"But that doesn't mean it's over," Tomczyk told Reuters. "They

E*Trade still have their issues to work out."

The action in TD Ameritrade shares may provide a better gauge of how seriously Wall Street is taking the prospect of a deal as the stock is up a modest 1.5% to $20.49 on comparatively light volume.

First-quarter results still lie ahead for both E*Trade and TD Ameritrade, but another big player in the group,

Charles Schwab

(SCHW) - Get Charles Schwab Corporation Report

, reported its numbers before Thursday's opening bell.

Schwab came in a penny short of Wall Street's profit expectations as revenue tumbled 12% on a year-over-year basis, although San Francisco-based company did say it believes the "worst of the environmental pressure" on its topline is behind it.

>> Who Owns ETFC?: Tiger Global


E*Trade acquisition debate

last got ramped up on April 6 when Keefe, Bruyette & Woods put out a note that looked at the financial scenarios under which TD Ameritrade or Charles Schwab might make such a deal. But the firm was careful to note that it didn't believe any transaction, which it determined would be vastly complicated, was imminent.


Written by Michael Baron in New York