The spokesman said that talks on a possible merger between Dasa and BAe had reached an ``advanced stage,'' but there had been no recent developments.

``There is no new basis for making a decision,'' the spokesman said.

The spokesman did not name any names, but his remarks appeared to confirm a report in the Handelsblatt business daily which said France's Aerospatiale could come back on board and join a broad European defence and aerospace merger.

``It is quite conceivable that the French could be involved from the beginning,`` Handelsblatt quoted Roland Klein, spokesman for Dasa's parent, carmaker DaimlerChrysler AG, as saying.

Cooperation talks between the three companies, which are partners in the Airbus civil aircraft consortium, ran into trouble before Christmas after it became clear that Dasa and BAe were mulling a bilateral deal.

Both Dasa and BAe had been frustrated by the slow progress of three-way talks, with the main snag being the French state's substantial holding in Aerospatiale.

They bid to achieve a ``private sector solution'' to the merger saga.

Handelsblatt said merger between Technology unit and partial float of the new company would go through in the first half of 1999.

Merger talks between Dasa and BAe were thrown off course when Britain's General Electric Co Plc approached BAe offering to sell its Marconi defence unit.

DaimlerChrysler's Klein told Handelsblatt that Dasa and BAe had been planning when the GEC proposal came in.

Separately, London's Financial Times reported on Thursday that GEC had set an ultimatum calling for BAe to come up with an acceptable offer by the end of this week.

Industry sources said that if there is a deal between BAe and Marconi it was unlikely that there would be a subsequent Anglo-German merger.

But if GEC links up with another partner, like France's Thomson-CSF or a US company, then the talks between BAe and Dasa could quickly brought to a positive conclusion, the sources said.

France's La Tribune daily reported on Tuesday that GEC and Thomson-CSF were in the final stages of talks on a merger involving GEC unit Marconi.