By Natascha Divac and Ulrike Dauer

FRANKFURT--Shares in German industrial gases company Linde AG rose sharply Wednesday following news that U.S. competitor Praxair Inc. had moved to resume merger talks that could lead to the creation of a $60 billion industrial-gas giant.

The Wall Street Journal reported Tuesday that Praxair has restarted talks with the German company two months after previous negotiations failed. The talks were later confirmed by the two companies.

At the market opening, Linde shares rose 4.5% before slipping back slightly. At 0838 GMT they were up 4% at 161.73 euros ($171.93).

A combination of Linde and Praxair, each worth about $30 billion, could create the world's largest industrial-gas producer.

Praxair cautioned Tuesday that there was no assurance this latest step would result in a deal.

Previous talks stalled in September in part because Munich-based Linde was uncomfortable with a plan to move the combined company's European headquarters to the U.S., people familiar with the matter said at the time.

"The market generally considers a merger as making strategic sense," a Frankfurt-based trader said.

Some analysts are nevertheless unsure whether such a deal can be struck.

"Although anti-trust regulatory clearance seems feasible, it requires substantial divestment and is still uncertain," said Jeremy Redenius of Bernstein. He said Linde would likely demand merger terms that Praxair, known for its bidding discipline, could struggle to accept.

-Write to Natascha Divac at natascha.divac@wsj.com and Ulrike Dauer at ulrike.dauer@wsj.com

(END) Dow Jones Newswires

November 30, 2016 03:59 ET (08:59 GMT)

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