BMW and Fiat have refuted reports that they are dropping talks over cooperation between their MINI and Alfa Romeo brands.

BMW and Fiat have been studying a cooperation code-named ‘Butterfly’ since late 2007. The two companies have been eyeing the use of Fiat parts or even a complete platform for the next Mini as well as cooperation on petrol and diesel engines.

The German business daily Handelsblatt, citing unnamed industry sources, reported today that the two auto giants were dropping plans for the partnership.

However, a BMW spokesman was quoted by Reuters today denying the report. He said, while talks were more complex than expected, they were continuing.

A Fiat spokesman was also quoted by media today as confirming talks were still on.

It had been thought part of the deal would see BMW help Fiat get Alfa Romeo back into the US, which it abandoned in 1995. A recent deal with Chrysler would also achieve that aim, which may have prompted the speculation over the Fiat-BMW talks.