The Tokyo District Court ordered a halt Tuesday to merger negotiations between Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc. in a move that could kill the creation of what would have been the world's largest banking group.

The order came a day after the court finished hearing statements from UFJ and Sumitomo Trust & Banking Co. The latter has said UFJ's unilateral cancellation of its plan to sell UFJ Trust Bank to Sumitomo Trust is a breach of contract.

Presiding Judge Tomonao Onizawa said Tuesday that the sales accord UFJ struck with Sumitomo Trust in May is legally binding and that Sumitomo Trust would clearly suffer heavy damage if UFJ enters merger talks with a third party.