TOKYO Aug 5 Mitsubishi Heavy Industries dropped 4.7 percent and Hitachi Ltd lost 4 percent in early morning trade on Friday after sources with knowledge of the matter said talks between the two firms to combine some infrastructure businesses would likely be suspended.
The sources also said that the chance of a full merger between Hitachi, Japan's biggest industrial electronics firm, and Mitsubishi Heavy, the nation's leading heavy machinery maker, appeared slim.
The suspension of talks comes after news first surfaced on Thursday that the two firms were discussing the combination of some businesses such as next-generation power operations and smart grids, with an eye towards a possible merger further down the road.
On Thursday, Hitachi shares closed up 1.7 percent at 471 yen after rising as much as 3.8 percent. Mitsubishi Heavy shares rose 3.4 percent after jumping as much as 5.4 percent. (Reporting by Mariko Katsumura; Editing by Edmund Klamann)