WASHINGTON - General Motors ha been in preliminary talks about acquiring Chrysler, but the talks were suspended due to the upheaval in financial markets, the Wall Street Journal reported late on Friday.

The talks between GM and Cerberus Capital Management, the private equity firm that owns Chrysler, began more than a month ago and are not certain to produce a deal, the New York Times said.

The Times said two people close to the process said the chances of a merger were '50-50' as of Friday and would most likely still take weeks to work out.

A merger would drastically reshape the ailing US auto industry, reducing the Big Three of Detroit to the Big Two.

GM shares have fallen to near a 60-year low on fears the global financial crisis could derail turnaround plans.

GM and Detroit's other automaker, Ford Motor both ruled out on Friday seeking bankruptcy protection.

GM shares fell as low as US$4 (S$6) early on Friday, the lowest price for the stock since 1949, but recovered and ended up 13 cents, or 2.7 per cent higher, at US$4.89 on the New York Stock Exchange. -- THOMSON REUTERS