UPDATE 3-Repsol, Galp deny report of merger talks

(Adds Galp denial, analyst comment)

LISBON, Aug 8 (Reuters) - Spanish oil company Repsol (REP.MC) and Portugal's Galp (GALP.LS) denied a newspaper report on Friday that they were negotiating a possible merger.

"Galp Energia would like to clarify that it had no contacts with Repsol in order to create a merger in the Iberian energy sector," Galp said in a statement, referring to a report in Portuguese business daily Diario Economico.

"We deny it," a Repsol spokesperson also said.

Citing unnamed sources close to the negotiations, Diario Economico reported that the talks could involve possible asset swaps between the two companies.

The paper said a possible link-up between Repsol and Galp could involve the departure of Italy's Eni (ENI.MI) as a shareholder in Galp. Eni holds 33 percent of Galp.

Shares in Galp rose 1.01 percent to 13.03 euros by 1030 GMT, helped also by news of an oil find in Brazil late on Thursday.

Repsol shares rose 1.17 percent to 20.76 euros, while the DJ Stoxx oil and gas index .SXEP was 0.54 percent lower.

Analysts at BPI said in a research report that they doubted a tie-up with Repsol was on the cards, pointing out that Eni was unlikely to want to sell its stake in Galp after the oil find in Brazil.

"Why would Eni be willing to sell at this point?" BPI said. (Additional reporting by Martin Roberts and Judith Mcinnes in Madrid, editing by Will Waterman)