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EADS-BAE talks blocked, need govt intervention - sources

PARIS, Oct 10 (Reuters) - Talks over a merger between EADSand BAE Systems were blocked on Wednesday a few hours ahead of adeadline and only intervention by the French, German and Britishleaders could break the deadlock, sources familiar with thenegotiations said.

EADS and BAE have until 1600 GMT onWednesday to ask for an extension to their talks to create theworld's biggest arms and aerospace group and can only do so ifthere has been significant progress in negotiations.

One source said that the deadlock would only be broken ifGerman Chancellor Angela Merkel, French President FrancoisHollande and British Prime Minister David Cameron signalledtheir approval for more talks.

"Things remain blocked. There has been no movement sincelast night" the source said.

Britain and France have made several steps to agree broadterms of the merger proposal, but Merkel is still opposed to thedeal, several sources involved in the talks have said.

It was not clear whether Cameron, Hollande and Merkel hadbeen in touch over the deal. Cameron was speaking at his party'sconference in the British city of Birmingham on Wednesdaymorning.

If there is a breakthrough, BAE will probably ask for themaximum extension of 28 days for the talks, in order to clear alogjam between the three governments which are divided overstate shareholdings in the merged company.

With no intervention, the companies were likely to announcethat they will not seek an extension, effectively calling themerger talks to a halt, at least for the foreseeable future.

(Writing By Jane Barrett, editing by Peter Millership)

((jane.barrett@thomsonreuters.com)(+44 20 7542 3666)(ReutersMessaging: jane.barrett.thomsonreuters.com@reuters.net))

Keywords: EADS BAE/LEADERS