Both Fiat Chairman Luca di Montezemolo (left) and CEO Sergio Marchionne (right) have confirmed that Fiat is in talks with Daimler AG.

Mercedes-Benz owner, Daimler AG, has swiftly moved to dampen rumours of an interest in acquiring Fiat, which have been growing since Fiat CEO Sergio Marchionne revealed last week that the two European carmakers were 'speaking about everything'. Today, the German firm refuted media reports that it was poised to make a bid for Fiat: "We are not interested in buying Fiat," Daimler AG spokesperson Thomas Froehlig revealed to the Dow Jones Newswires service this morning. Media stories suggest Daimler was prepared to pay 26 euros a share for Fiat's stock.

The first positive signs of contact between the two firms came back in June when Fiat Powertrain Technologies signed a long-term deal with Mitsubishi Fuso (85 pct owned by Daimler Trucks) to supply engines. Then last month rumours spread that the two carmakers could enter into a number of platform sharing arrangements, with speculation suggesting this could involve Mercedes using Fiat's 'Small' architecture while Alfa Romeo in turn could gain access to the next generation E-class platform.

At the time the Reuters news agency quoted a Mercedes-Benz spokesman as saying: "We don't exclude (collaboration accords) categorically and we are in cooperation with others. We will entertain them if they make sense in certain fields and certain areas." Reuters said the spokesman had declined to discuss Fiat. However some flesh was put to the swirling rumours. "There are contacts with Mercedes, as with other automakers," The same day Fiat Group President Luca di Montezemolo was reported as saying by Italian news agencies: "I discussed them today with Sergio Marchionne. Obviously, it is premature to talk about alliance,” Montezemolo added.

Last week on the sidelines of a meeting, Marchionne added timber to the fire by telling journalists that: 'with Daimler we are speaking about everything, not just engines'. This has in turn led to renewed speculation about the possibilities of any proposed collaboration, with some media sources even suggesting this week that Daimler, itself recently freed from the draining clutches of US carmaking partner, Chrysler, could be contemplating a bid for Fiat. Marchionne, who has made targeting cooperation with other car manufacturers a core part of his strategy for Fiat, and has said on a number of occasions that he expects a new alliance to be announced before the end of the year.