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EADS rebuffs merger collapse report, cites progress

PARIS, Oct 9 (Reuters) - EADS rejected a German news agency report that merger talks with BAE Systems had collapsed and confirmed progress between Britain and France over the deal.

"We are surprised to see the reports from Berlin. Only this morning, we have received the information that France and the UK have made significant progress on the issue that was blocking the negotiations for the last few days," an EADS spokesman said in an emailed statement.

"The two companies will discuss the situation and possible steps forward this afternoon."

Shares in EADS rose sharply on the report by German news agency DPA and fell back after the EADS statement.

BAE declined comment.

Reuters reported earlier that Britain and France had made progress in talks over a possible cap on state shareholdings in any merger between EADS and BAE Systems , but that any deal must overcome possible opposition from Germany.

(Reporting by Tim Hepher)

((tim.hepher@thomsonreuters.com; +33 1 49 49 54 52; Reuters Messaging: tim.hepher.thomsonreuters@reuters.net))

Keywords: EADS BAE/DENIAL