Tata Steel in talks for stake in Germany's ThyssenKrupp

Even as Tata Steel puts its troubled British business up for sale, the company is in talks for the possible purchase of parts or all of ThyssenKrupp's European steel operations, a German newspaper reported on Friday.

The speculation of a tie-up with Tata Steel appeared to appeal to investors with ThyssenKrupp shares emerging the biggest gainers on the Frankfurt Stock Exchange today, shooting up more than 6 per cent in a generally softer market.

The regional daily Rheinische Post quoted German government sources as saying that talks were already at an advanced stage and that a number of different options were being considered.

The favourite option is not a straightforward purchase, but a joint venture with the possibility of increasing Tata Steel's stake later on, the newspaper said.

Earlier this week, Tata Steel put its British business up for sale, sparking calls for the British government to intervene and safeguard thousands of jobs in the crisis-hit industry.

Tata said in a statement that trading had "rapidly deteriorated" in Britain and Europe, adding it will "explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in part".

The company blamed chronic global oversupply of steel, a "significant increase" in cheaper imports into Europe - particularly from China - and plunging prices in recent times.

Tata is also battling high costs, currency volatility and weak global demand for steel, which is mostly used in construction.

Analysts immediately predicted consolidation in Europe's steel sector, with German heavy industry giant ThyssenKrupp likely to take part.