PARIS - General Motors is in talks about a possible tie-up with the French automaker PSA Peugeot Citroën, a French government official said Wednesday. Peugeot's chief executive, Philippe Varin, "informed me last night of these discussions for a strategic partnership, and told me it was good news for the company," Labor Minister Xavier Bertrand told Europe 1 radio. While the companies declined to confirm the talks, it appeared that any deal would focus on joint development and production of some parts or models. Such an alliance would help cut costs, but analysts said it would not solve the much larger problems Peugeot and Opel face as a result of excess factory capacity and fierce competition in the European market for mid-price cars. Peugeot's investors clearly welcomed the negotiations, with Peugeot shares soaring nearly 12 percent in Paris afternoon trading. Shares of G.M. slid 0.6 percent in early trading in New York. General Motors, which last year reclaimed the title of world's largest automaker from Toyota Motor, already has a major presence in Europe through its struggling Adam Opel unit , based in Rüsselheim, Germany. G.M. and Peugeot are both under pressure to restructure in a market that analysts expect to shrink in 2012 for a fifth consecutive year. Peugeot, the second-largest European automaker after Volkswagen, said last week that 2011 net income fell by 48 percent from a year earlier, to €588 million, or $776 million, amid losses at its automotive unit, and that it would sell €1.5 billion of assets to cut debt. General Motors said Feb. 16 that its European operations lost $562 million in the fourth quarter alone, even as the company posted a large overall profit. G.M. sought in early 2009 to sell Opel but later changed its mind. With an eye to the successful Renault-Nissan alliance, Peugeot has held talks on cooperation with Fiat, Mitsubishi Motors and Bayerische Motoren Werke over the last few years. It has for more than a decade cooperated with BMW to produce four-cylinder engines used in the BMW Mini as well as Peugeot and Citroën models. Peugeot depends on Europe for almost 60 percent of its sales, and labor costs at its French factories are more than three times higher than in Eastern Europe and other lower-wage countries. A tie-up with G.M. might make sense to the extent that it provided Peugeot access to growing markets overseas and to cut costs. La Tribune, a French financial daily newspaper, first reported the talks late Tuesday. According to the newspaper, which did not identify its source, the talks have been going on for months with a goal of creating "an alliance, not ad hoc cooperation." A deal could be announced as soon as the Geneva Motor Show next month, the report said. The companies themselves had little to say. In a statement that did not identify General Motors as its negotiating partner, the French automaker said it was examining cooperation projects and alliances "as part of its strategy for globalization and improved performance." A press officer declined to comment further. Kelly Cusinato, a G.M. spokeswoman, said by e-mail: "We routinely talk to others in the industry but have no comment beyond that." Analysts were hesitant to discuss the impact of any deal, citing the scarcity of available information. But they said opposition to plant closings from French and German unions and political leaders meant it was unlikely that a merger-type deal was in the works. They said it was more likely that the companies would agree to swap technology or to cooperate on powertrain and platform development, with little or no change in capital structure. The Peugeot family, which first began producing cars in 1889, holds about 30 percent of the shares in the French automaker and about 48 percent of the voting rights. It has said in the past that it wishes to remain the company's No.1 shareholder. "There is certainly an argument for a relationship between the pair," Ian Fletcher, an analyst at I.H.S. Global Insight in London, said. They build pretty similar vehicles. From a technological standpoint there is an argument to combine engineering resources. That would likely mean cooperating on things like vehicle architecture, transmissions and engines, he said, an arrangement that would allow the companies to reduce the cost of developing new models. Noting the labor and political impediments to a broader combination and restructuring, Mr. Fletcher said Mr. any attempt to jointly restructure plants would result in "an uproar in Germany or France." "The whole problem of their manufacturing bases is an issue they need to deal with alone," he added. Jack Ewing reported from Frankfurt.