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French Prime Minister Manuel Valls said the government did not want carmakers Renault and Nissan to merge.

At the moment the companies own large shareholdings in each other and co-operate closely.

However, on Friday Renault held an emergency amid reports the French government, one of its biggest shareholders, wanted a merger.

Mr Valls has denied that, saying he hopes the existing alliance, which dates back to 1999, would continue.

"The state is fully playing its role as a shareholder," the French prime minister said. "And at the same time, we fully trust Nissan and Renault managers."

French car manufacturer Renault owns 43% of Nissan, while the Japanese firm holds 15% of Renault.

Last week Reuters reported that French economics minister Emmanuel Macron had been pressuring Carlos Ghosn, who serves as chief executive of both companies, to undertake a full merger.

Amid escalating tensions, Renault said on Friday it had started the "first stage in discussions between the two main long-term Renault shareholders, the French government and Nissan".

Nissan has expressed concern after the French government unexpectedly raised its stake in Renault to 19.7% and doubled its voting rights in April.

The move had "highlighted an imbalance in the Renault-Nissan alliance", Nissan chief competitive officer Hiroto Saikawa, a Renault director, said on Friday.

"Nissan would like to put this matter behind us as soon as possible so that we can re-establish the foundations of a successful alliance and focus on our real business," he added.