GM/Chrysler talks intensify, Europe carmakers warn

By David Bailey and Helen Massy-Beresford

DETROIT/PARIS (Reuters) - General Motors Corp (GM.N) intensified talks to acquire Chrysler LLC on Friday amid a worsening global auto downturn that forced deep cuts of salaried jobs at Chrysler and a warning from France's PSA Peugeot Citroen (PEUP.PA).

Shares of U.S. automakers and parts suppliers also fell under a broader stock market decline on Friday, including a 26-year low at No. 2 U.S.-based automaker Ford Motor Co (F.N) which is also cutting back due to the industrywide slowdown.

Chrysler aims to cut about 5,000 salaried and contract workers, or 25 percent of the white-collar staff, amid the auto industry downturn, including extending buyout offers starting in November and involuntary cuts by year end.

However, a combination of GM and Chrysler, and its potential wide-ranging impact on the auto-parts supply base that encompasses thousands of companies and millions of workers, holds center stage in North America.

The core of the discussions between GM and Chrysler owner Cerberus Capital Management CBS.UL would be an asset exchange that leaves Cerberus with all of GMAC LLC and a stake in the automaker itself, sources told Reuters.

Cerberus owns a 51 percent stake in GMAC, GM's former captive finance arm, and would retain ownership of Chrysler Financial, the captive finance arm for Chrysler.

United Auto Workers President Ron Gettelfinger said on Friday the union had met with automakers to discuss the status of potential pending deals, but declined to say which ones, industry publication Automotive News reported.

U.S. Sen. Debbie Stabenow, a Michigan Democrat, also told reporters that GM and Chrysler had not as yet sought government financial support to fund a merger, Automotive News said.