SHANGHAI : China's state-owned asset regulators are considering a merger of China Eastern Airlines and Shanghai Airlines, state media reported Wednesday.

"So far the discussion is among government agencies, and the two carriers have not participated," the Caijing magazine reported on its website Wednesday, citing an unnamed industry source in Shanghai.

Spokesmen with Shanghai Airlines and China Eastern Airlines both said they had not heard of such a merger plan when contacted by AFP.

A merger of China Eastern, the nation's third largest carrier, and smaller rival Shanghai Airlines would help consolidate aviation resources in Shanghai, one of China's aviation hubs, the report said.

Shanghai-based China Eastern signed a preliminary deal in September to sell a 24 percent stake to Singapore Airlines (SIA) and Singapore’s Temasek Holdings for 923 million US dollars.

But minority shareholders of China Eastern rejected the bid, worth 3.80 Hong Kong dollars (0.49 US cents) a share in January.

China Eastern management then rejected a counter offer by China National Aviation Corp (CNAC), parent of flagship carrier Air China, insisting it would continue to seek a partnership with SIA.

In the late afternoon, shares of Shanghai Airlines surged 7.94 percent to 6.8 yuan (1 dollar) while China Eastern Airlines jumped 7.24 percent to 8.0 yuan, outperforming a 0.83 percent rise in the benchmark index.

- AFP /ls