"Any merger talk is pure speculation," Turner told reporters at the Paris Air Show when asked to comment on reports BAE that is in tie-up talks with Boeing Company, Lockheed Martin Corporation or, according to the latest report, with General Dynamics Corporation.

He did, however, reiterate that he sees the long-term future for BAE in the United States, where the defense department is increasing military expenditure.

A BAE spokesman earlier had played down an unsourced report in the British newspaper The Sunday Times that the British group is planning a link-up with General Dynamics.

"We talk regularly to all the major players in the industry," a BAE spokesman told AFX, AFP's financial news subsidiary.

In London, an unsourced report Sunday in the Business said the mooted mega-merger of BAE and Boeing would be blocked by the British defence ministry until BAE improves its performance on specification.

The newspaper also said the defence ministry opposes the transatlantic tie-up at present over fears that Britain would lose intellectual property rights to the United States without being granted greater access to sensitive US information.

Industry sources commented that a major merger by BAE with another company was unlikely in the short term.

BAE has also reportedly turned down a merger approach made by the French firm Thales.

Senior BAE executives, led by Turner, are understood to consider General Dynamics either as a full-blown merger candidate, or as a buyer for BAE's shipbuilding business as part of a three-way deal with Boeing.

The emergence of General Dynamics as a key player in BAE's search for a transatlantic link-up, on the eve of the Paris Air Show, will reignite speculation about the future of the British group.

Turner has repeatedly stated that one of BAE's key strategies is to strengthen its position in the lucrative US defense market.

The 45th edition of the biennial Paris Air Show, the aviation industry's largest event, opened Sunday at Le Bourget airport, north of Paris.

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