INVESTMENT FOCUS-M&A deal machine seen buoying markets post-Fed

(Repeats, without changes, story first published on Friday)

* YTD transaction volumes just shy of 2007 record

* Fed rate pause seen giving market a breather

* Company cash, lack of returns also drive M&A

* U.S. growth prospects attract record flows

By Lionel Laurent and Sudip Kar-Gupta

LONDON, Sept 18 (Reuters) - For all the uncertainty on financial markets surrounding the U.S. Federal Reserve's decision to put off a rise in interest rates, investors bet it will keep the music playing for corporate deal activity.

Worldwide mergers and acquisitions have hit $3.1 trillion year-to-date, according to Thomson Reuters data, just 0.9 percent shy of 2007's record over the same period. Cheap central-bank funding, corporate cash piles in the trillions of dollars and a benign economic environment have all played a part.

While deal hopes failed to prevent a bruising stock-market sell-off on Friday, they may prove more buoyant further out.

"The Fed's decision to hold off on the rate rise will be good for M&A in general as it will keep borrowing costs cheaper for longer," said Tom Cooper, co-chairman of global M&A at Deutsche Bank, adding that emerging markets were especially vulnerable to a continued tightening of U.S. monetary policy.

This week alone has seen banner deals in the offing, even as uncertainty over China's slowdown and U.S. rates runs high.

European telecoms group Altice pounced on the fourth-largest U.S. operator Cablevision Systems with a debt-fuelled $17.7 billion deal and Anheuser-Busch InBev approached brewer SABMiller about a merger.

The outlook for stock-market listings also appeared to get a boost on Friday, with British payments processing firm Worldpay (IPO-WORLD.L) saying it planned to raise about 890 million pounds ($1.4 billion) through a London listing rather than go for a straight sale. The Fed decision and recent market volatility were seen as key.

Traders and deal advisors report a slight tightening of credit conditions this year for corporates, due to brewing expectations that a Fed rate rise would put paid to a multi-year bonanza in corporate borrowing. Fears of a shrinking window of opportunity may have been adding to deal enthusiasm, some said.

"There is definitely a rush for the door (to raise funds)," said Edmund Shing, global head of equity derivatives strategy at BNP Paribas. "Companies' cost of funding will be going up slowly ... Corporate treasurers will be asking themselves: Why should we wait?"

To be sure, financing costs are not the only driver of deal-making optimism.

Companies have built up an impressive post-crisis cash pile with few obvious destinations for reliable shareholder returns. Even without raising debt and even in the face of lofty bull-market valuations, the timing is ripe for buybacks and deals.

And the U.S. economic recovery, while paradoxically seen as a negative by some investors who fear the impact of tighter monetary policy on asset prices, has attracted huge appetite for takeovers. Cross-border M&A into the United States hit its highest level year-to-date since records began in 1980.

Bank of America Merrill Lynch equity strategists said European equities still represented good value for investors, while Christoph Riniker, head of equity strategy research at Julius Baer, said companies were eyeing deals in order to spend cash stored away in the aftermath of the 2008 credit crisis.

Some, such as Cavendish Corporate Finance partner Jonathan Buxton, played down the negative impact of a U.S. rate hike as it would boost U.S. companies' dollar purchasing power abroad.

But with acquisitive companies still relying on leverage as a key component of deal finance, the rate outlook is key for both investor and corporate appetite for buying company equity.

"In terms of jumbo M&A, the past 12 months have been pretty exceptional," said Guillaume Sarlat, head of boutique firm Sarlat Advisory.

"The Fed's decision has given us a breather. It will prolong these absolutely exceptional market conditions ... The deal-finance window is still open."

($1 = 0.6395 pounds) (Reporting by Lionel Laurent; Editing by Ruth Pitchford)