German industrial gas supplier Linde confirmed Tuesday reports that it was "in preliminary discussions about a possible merger" with its US competitor Praxair.

"Discussions are taking place and have yet to lead to any concrete result or agreement," Linde said in a brief statement after reports that talks had started over a potential tie-up.

"At present it is unforeseeable whether there will be a transaction," Linde added.

Linde shares soared 11 percent in Frankfurt afternoon trading. In New York Praxair stock was up more than five percent in early deals.

A potential merger between the two companies would create a giant that would overtake French group Air Liquide as the world's number one supplier of industrial gas.

But it would also slash the number of large players on the world industrial gas market to three, with some risk of challenges from competition authorities in the United States or the European Union.

Air Liquide took the top spot from Linde by sealing a deal at the end of May for the acquisition of US firm Airgas, which should take its annual revenues to more than 20 billion euros ($22.4 billion).

Chief executive Benoit Potier said recently that he was glad to be "ahead by a length".

But Linde and Praxair combined would have estimated annual revenues of more than $30 billion -- robbing Air Liquide of the top spot once again.

"A merger of Praxair and Linde is more likely," since Air Liquide's takeover of Airgas, DZ Bank analyst Peter Spengler wrote on Tuesday, and would "create a clear number one in the gases sector".

The two groups could reap the rewards of "clear overlaps with high synergies," he added.

But while authorities in the US "may back the deal", he wrote -- noting the non-overlapping nature of Linde and Praxair's operations in America -- "it is uncertain whether European regulation authorities would give a green light for this combination".

The two firms have discussed selling off some assets to allay antitrust regulators' fears, Bloomberg News reported, citing sources familiar with the talks.

Linde has suffered from weak orders for its turnkey industrial facilities, mostly sold to oil and natural gas companies, as oil prices have weathered punishing lows in recent years.

Gas, less vulnerable to demand cycles, remains the Munich-based firm's largest division and is seen as a more certain source of revenue.

Linde employs 64,000 people worldwide, while Connecticut-based Praxair has 26,000 staff.