Shares in Renault and PSA Peugeot Citroen rose sharply today on market talk of a merger between the two groups.

A spokesman for PSA Peugeot Citroen declined to comment, while analysts maintain that a deal between the two is unlikely.

Reuters said that Peugeot shares were up 7.9% at 14.95 euros and Renault shares were up 7.67% at 13.05 euros.

Reuters reported that PSA’s announcement that it had appointed Barnaby Noble – a former VP of mergers and acquisitions at Alstom – as director of strategy and business development fuelled speculation.

However, analysts are sceptical about a merger of the two French giants and note that job losses from such a merger would be high, something that the French political establishment would not be happy about.

Nevertheless, radical industrial restructuring in the automotive sector is seen by some as increasingly likely as it endures collapsed market volumes this year.