NEW YORK (AFP) - Megamerger buzz returned to Wall Street on Friday (Oct 21) on a mixed day for US stocks, with shares of Time Warner and Reynolds American both surging on news of possible takeover deals.

Tobacco giant Reynolds American shot up 13.8 per cent after British American Tobacco launched a US$47 billion (S$65 billion) bid to buy the 58 per cent of the company it does not yet own.

Time Warner soared 7.8 per cent as the Wall Street Journal reported that telecom giant AT&T was in advanced talks to acquire the entertainment group. AT&T fell 3.1 per cent.

Microsoft jumped 4.3 per cent to top its December 1999 record high after it reported a better than expected US$4.7 billion in net profit.

The Dow Jones Industrial Average shed 0.1 per cent to 18,145.71.

The broad-based S&P 500 lost less than 0.1 per cent at 2,141.16, while the tech-rich Nasdaq Composite Index gained 0.3 per cent to 5,257.40.

Dow member McDonald's advanced 3 per cent after reporting better-than-expected earnings as strong comparable sales growth in Britain, Japan and some other overseas markets offset slowing growth in the US.

General Electric, another Dow member, lost 0.3 per cent as the industrial giant lowered its 2016 earnings growth forecast following a 20 per cent dip in third quarter earnings to US$2 billion.

PayPal surged 10.1 per cent after reporting a 7.3 per cent increase in third quarter earnings to US$323 million with active customer accounts rising 11 percent to 192 million.

Biotech shares were under pressure, with Amgen losing 1.9 per cent, Biogen 3 per cent and Celgene 1.1 per cent.