PARIS, France (AP) — French carmaker PSA Peugeot Citroen said yesterday it is in talks with Mitsubishi Motors Corporation that could lead to a “strategic partnership”.

In a statement, France’s biggest automaker said it “confirms that it has started discussions with Mitsubishi Motors… concerning the possibility of extending their relationship which could lead to a strategic partnership”.

The statement did not go as far as a report in Japan’s Nikkei business daily which said that Peugeot Citroen will buy a 30 to 50 percent stake in Japan’s number four automaker for up to 300 billion yen (US$3.4 billion, euro2.25 billion).

Peugeot Citroen spokesman Hugues Dufour declined to comment on the report. He noted that CEO Philippe Varin has said that partnerships or acquisitions could be possible provided Peugeot Citroen remains independent and the add-ons provide real benefits and fit with the overall strategy.

The report sent shares in Mitsubishi soaring. They closed up 13.4 percent at 135 yen in Tokyo after earlier soaring nearly 20 percent. On Wednesday, Peugeot Citroen shares closed up 1.3 per cent at euro24.59.

Mitsubishi declined to confirm the Japanese newspaper report, which gave no sources. But the Japanese company issued a statement saying: “There are no facts to be announced.”

The paper said Peugeot Citroen — Europe’s second biggest car company — and Mitsubishi are in the final stages of capital tie-up talks. The deal could effectively put Mitsubishi under Peugeot Citroen’s control, creating the world’s sixth-largest automobile alliance.

The French car-maker may seek more than a 50 per cent stake in Mitsubishi, hoping to tap into Mitsubishi’s expertise in electric vehicles and other environmental technology, the paper said.

Peugeot Citroen said it has already worked with Mitsubishi on product development with co-operation on 4×4 vehicles, clean technologies with electric vehicles and a joint venture in Russia.

The electric car, to be launched in Europe by the end of 2010, will be based on Mitsubishi’s i-MiEV, which was launched on the Japanese market in June.

Mitsubishi will make 2,000 units of the i-MiEV in the current fiscal year to March 2010. The company said yesterday it aims to boost i-MiEV production to 15,000 units by March 2012.

In Russia they have set up an auto factory to make mid-sized sport utility vehicles. Production at the Russian joint venture will begin in early 2012.

Mitsubishi had formed a capital tie-up with DaimlerChrysler AG, which held a 37.3 per cent stake in the Japanese automaker. But DaimlerChrysler sold the entire stake in Mitsubishi in 2005, ending the tie-up.

Peugeot Citroen shares were little changed in Paris morning trading, at euro24.60.