Investment bank UBS has said in a research note that Ford Europe could make a good candidate for a link-up with either Fiat or PSA.

Fiat's options - after failing to merge with Opel - remain wide, it says. "While the market's focus is on Peugeot, we also think a deal with Ford on the European operations would make sense with the next best fit in terms of product and geography. A combination with Fiat Auto (or Peugeot) could provide Ford with an answer to scale in Europe and Brazil and another access to capital markets at lesser dilution cost for core shareholders," UBS says.

The analysts at UBS believe that Ford Europe also needs scale in Europe and in Brazil while parent Ford Motor could benefit from increased access to capital markets should a combined entity be listed separately in Europe.

A Ford deal, UBS says, could be of interest to both Fiat and Peugeot and could also lead Ford to revisit its decision to sell Volvo Cars, 'a transaction which is proving quite lengthy'.

However, UBS notes that Ford is 'possibly under less pressure to do a deal'. Ford is likely to gain market share in the US following the bankruptcy of GM and Chrysler, it says.