Shares in General Motors and Ford, both of which took a severe battering last week, surged yesterday after reports that they had held merger talks with each other and with Chrysler.

Although no firm link is thought to be imminent, investors were buoyed by the prospect of a giant American carmaker that could withstand better the intense pressures of a weak global market. Shares in GM closed $1.62 up yesterday, a 33 per cent rise, at $6.51, while shares in Ford leapt 24 per cent to end the day at $2.47.

Bob Nardelli, the chief executive of Chrysler, told staff that he was talking to a number of parties about potential tie-ups. Ford declined to comment.

GM said: “GM officials routinely discuss issues of mutual interest with other automakers. As a policy, we do not confirm or comment publicly on those private discussions, which, in many cases, do not lead anywhere.”

The rout in car industry jobs continued yesterday as GM brought forward plans to close a factory and Nissan cut jobs in Spain. GM is to close its sports utility vehicle plant in Wisconsin, which employs 1,200 people, this year, having previously announced a closure date of 2010. Nissan is cutting 1,680 jobs at its factory in Barcelona.

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