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VW, Volvo shares rise on report of talks

                 FRANKFURT, Germany - Shares of Volkswagen and Volvo jumped
                 Wednesday in European trading after a newspaper report said the two
                 carmakers were discussing an alliance that could eventually lead to a

                 The Wall Street Journal quoted unidentified sources in Wednesday's
                 editions as saying the two companies were in preliminary talks on a
                 business alliance that could eventually lead to a merger. 

                 The newspaper said Volkswagen is looking for a partner that could
                 help it enter the market for medium and heavy trucks. Volvo is one of
                 the world leaders in that area. 

                 Germany's Volkswagen is Europe's largest carmaker, while Sweden's
                 Volvo is a leader in making trucks. 

                 Auto industry watchers said a deal would be the right strategic move in
                 light of German carmaker Daimler-Benz's May agreement to buy

                 Volvo confirmed that its chief, Leif Johansson, met with Volkswagen
                 chairman Ferdinand Piech last Friday in Goteborg, Sweden, but
                 refused to comment further. 

                 A spokeswoman for Volvo Germany in Cologne, though, sought to
                 play down the significance of the meeting, calling it "completely normal."
                 She said the two men talked about the delivery of engines and other
                 components, adding that such conversations take place all the time. 

                 Spokesmen for Volkswagen, based in Wolfsburg, had no immediate

                 In Wednesday trading, Volkswagen shares were up 4.2% in Frankfurt
                 while Volvo shares were up 5.5% in Sweden. 

                 Currently, Volkswagen's commercial-vehicle division specializes in light
                 vans and minibuses. 

                 Price might be a sticking point. In a takeover, VW would presumably
                 have to pay cash or shares that represent a premium over Volvo's
                 current market value of about 23.5 billion marks ($13 billion), analysts

                 German companies seeking to stay competitive in the global market
                 have been increasingly aggressive about seeking partners abroad. 

                 Within the past two months, Volkswagen announced it intends to buy
                 two luxury automakers - Rolls-Royce Motor Cars of Britain and Italy's
                 Lamborghini. Daimler-Benz shook the auto world with its agreement in
                 May to buy the third biggest U.S. carmaker Chrysler for $33 billion in

                 European chemical and media companies have also gone on foreign
                 shopping sprees in recent years 

                 Bertelsmann, for example, is adding the biggest U.S. book publisher,
                 Random House, to its stable of print and music companies. Siemens is
                 buying Westinghouse Electric's non-nuclear power generation business
                 and Deutsche Telekom has a 10% stake in Sprint.