General Motors Co. and PSA Peugeot Citroen are in talks over a possible alliance, which pushed Peugeot's shares to a four-month high, reported The Detroit News on Wednesday.

According to the report, Peugeot was examining "projects for cooperation and alliances" related to its strategy of " globalization and performance improvement." Meanwhile, France's Labor minister Xavier Bertrand said Peugeot Chief Executive Philippe Varin had informed him Tuesday evening of the talks about a "strategic partnership" with GM.

Peugeot shares rose more than 20 percent to a four-month high on the Paris stock exchange as investors applauded the possible alliance.

Analysts said that the talks raise the possibility that GM might find a solution for its loss-making Opel and Vauxhall brands in Europe. GM Europe lost 700 million dollars last year. Last week, the head of General Motors Europe announced the company was in talks with unions and employee representatives on ways to cut costs and return Opel and Vauxhall to profitability.

Peugeot is second by sales only to Volkswagen AG among Europe's carmakers. It already has a partnership with BMW AG and Mitsubishi Motors on development of SUV, clean technologies and electric vehicles .

Bertrand said the proposed deal would give Peugeot Citroen the size it lacks to compete on a global scale. Peugeot "is above all a European champion, a national champion. If you have access to a global dimension, it's not a handicap," Bertrand said.

Last week, Peugeot Citroen forecast a 10 percent drop in car sales in its core French market this year, after booking a loss in 2011, as economic conditions remain tough. Last October the company announced plans to cut 6,000 jobs.