The US investment bank battered by slumping mortgage market, Bear Stearns, and China's CITIC Securities have agreed to swap stakes in each other and form a broad alliance.

The deal would bolster access to business in booming China for Bear, which lags bigger Wall Street rivals in expanding its business beyond the United States, analysts said today.

Under the preliminary agreement, CITIC would invest about $1 billion in Bear Stearns securities that would convert into about 6% of the New York-based investment bank.

Bear Stearns would buy $1 billion of CITIC debt that would over time amount to a 2% stake in the Beijing-based firm. Neither company could hold more than 9.9% of the other's stock.

'We are confident that combining our operations in Asia with CITIC Securities will greatly benefit Bear Stearns' global client base and generate substantial new revenues and growth opportunities for the firm,' Bear Stearns Chairman and Chief Executive James Cayne said in a statement.