UPS and TNT in buyout talks: source

NEW YORK (Reuters) - U.S. delivery company United Parcel Service (UPS.N) is in talks to buy Dutch rival TNT NV (TNT.AS), a source familiar with the talks said.

TNT shares jumped following the comment and an earlier report in Britain's Sunday Telegraph newspaper that UPS was planning a 10 billion euro ($15.2 billion) bid for TNT.

But the stock gave back all of its gains after Reuters inaccurately reported that a UPS executive, Dan Brutto, had played down or dismissed reports that the companies were talking. Brutto made no direct comment on the reported talks.

Speaking to Reuters at the Beijing Olympics, Brutto, president of UPS's international business, said UPS was always looking "at different things and try to fit (them) into the puzzle." He added, however, that acquisitions was not an area that he oversaw directly.

A UPS spokesman said the company does not comment on rumors or speculation about mergers.

TNT officials also declined to comment.

The person close to the talks, who declined to be identified because the talks are private, said the discussions were in the early stages but could provide no further detail.

UPS has a market value of $66.26 billion while TNT is valued at about $14.24 billion.

TNT shares have swing wildly in July and August, first on talk that FedEx Corp (FDX.N) had prepared, and then abandoned, a bid for TNT.

TNT shares have risen 14 percent in the past week on market talk of a UPS bid.

The shares closed at 25.11 euros on Monday, down nearly 1 percent. They have traded between 18.49 euros, a four-year-low, and 27.25 euros over the last two months.

TNT's express delivery unit, which accounts for two-thirds of sales, is seen as the key attraction for its rivals because of its relative resilience in an economic downturn.

"Operationally, TNT has a very extensive and inexpensive road network, which is a key advantage versus the more air-focused networks of FedEx, UPS and to some degree also DHL," ING analyst Axel Funhoff wrote in a recent note.

TNT also has a mail operation in the Netherlands, where it enjoys a partial monopoly.

Analysts said buying TNT would boost UPS and FedEx in Europe, where they are estimated to have 9 and 5 percent market share respectively compared with TNT's 24 percent share.

(Additional reporting by Foo Yun Chee in Amsterdam; Editing by David Cowell and Ted Kerr)