Digital Instruments Inc. and Zygo Corp. have called off their planned merger after weeks of stalled negotiations. The companies decided to terminate the letter of intent signed by both parties after efforts to bridge differences proved futile in recent weeks. Zygo and Digital originally had announced plans to merge in July, but the agreement was subject to several conditions, including approval by Zygo's shareholders and Zygo's plan to account for the transaction as a pooling of interests. A spokesman for Digital declined to specify what issues caused the merger to dissolve. However, there were discussions of future cooperative work between the companies. Digital, located in Santa Barbara, Calif., manufactures high-precision measurement products and systems that use scanning probe microscopy imaging and metrology technology. Zygo, based in Middlefield, Conn., designs and manufactures interferometric and confocal measurement technology.