Hyundai Motor may be leaning towards Slovakia for the location of a €1.1 billion euro ($US1.41 billion) European production centre, a source close to the deal told Reuters on Wednesday.

Slovakia and Poland were chosen as the final candidates for the location in late November, beating out the favourite, the Czech Republic, and Hungary in a battle for one of the largest greenfield investments in the region, the report noted.

"It seems Hyundai is leaning towards Slovakia for the plant location, although a final decision should be announced in mid-February," a source close to the deal told Reuters.

A source at Hyundai Motor reportedly backed his view, saying "Internally, the company appears to have made a decision. I cannot reveal details but Slovakia has an edge in labour costs."

According to Reuters, the sources declined to elaborate further but added that key executives from Hyundai Motor and affiliate Kia Motors, who made a tour to various sites last year, are in the final stage to pick the winning location for the plant.

Hyundai Motor plans to build the plant to secure a firmer foothold in Europe, where its sales are rising rapidly - the new factory will eventually have the capacity to produce at least 300,000 units per year, and construction is expected to begin in early 2005, Reuters added.