SHANGHAI (AFP) - China's sovereign wealth fund is considering buying a four to 10 per cent stake in German automaker Daimler, the website of the official People's Daily newspaper said at the weekend.

The potential purchase comes as China Investment Corp. (CIC), which had more than US$480 billion (S$59 billion) from the wealth fund under management at the end of 2011, seeks bargains in Europe's weak economy, said the website, quoting unnamed sources.

But a source with knowledge of the matter dismissed the report, saying it was "not true". Chinese media reported nearly a year ago that Daimler had been in contact with CIC regarding a possible deal.

The Financial Times newspaper valued a purchase of four to 10 per cent of Daimler at 1.8 billion (S$2.9 billion) to 4.5 billion euros.

A spokesman for CIC, declining to be named, said: "Our consistent policy is that we do not comment on any particular project."

Daimler, which produces luxury Mercedes-Benz cars as well as trucks, plans to sell 300,000 cars in China in 2015, about two-thirds of which will be from local production, the company said last month.

In October last year, CIC bought a 10 per cent stake in the company that controls London's Heathrow airport, according to Spanish construction group Ferrovial, one of the vendors.

Last January CIC bought a stake in British utility company Thames Water.

CIC was established in 2007 to invest some of China's massive foreign exchange reserves, the world's largest at US$3.3 trillion at the end of September last year.

China's sovereign wealth fund suffered a 4.3 per cent loss on its overseas investments in 2011 due to the weak global economy. It was the first loss since 2008, when CIC was hit by the global financial crisis.