ROME, Oct 11 Italy's Fiat has been in contact with Germany's Mercedes-Benz about a possib

ROME, Oct 11 (Reuters) Italy's Fiat has been in contact with Germany's Mercedes-Benz about a possible alliance, as it has had with other automakers, Fiat Chief Executive Sergio Marchionne said on Thursday.

''We have discussions open with auto companies,'' he told reporters while attending a ceremony at a university.

Marchionne said the board might discuss alliances at its next meeting on Oct. 24.

He also said Fiat's third-quarter results were in line with expectations, and confirmed its 2.7 billion euro ($3.8 billion) group trading profit target for the year.

''I have never cut them in my life and I am not about to start now. It is a bad habit,'' he said of the company's targets.

Fiat shares were up 1.51 percent at 22.82 euros in Milan, in line with the sector.

In Frankfurt, Mercedes parent Daimler was up 0.78 percent at 74.96 euros.

SWIRLING SPECULATION Speculation has swirled for weeks that Daimler could seek a partner to work on the next generation of Mercedes-Benz A-Class and B-Class compact cars, whose importance is being highlighted by the debate on cars' contribution to global warming.

BMW and PSA Peugeot Citroen have also been mentioned as possible allies for Daimler to develop small car platforms or new engines.

Earlier this week, Germany's Auto Motor und Sport magazine added Fiat to the list of possible contenders for an alliance.

Daimler declined comment. But on Wednesday, a spokesman said the automaker was ready in principle to work with other carmakers on projects of mutual interest.

Car makers form alliances to cut costs and protect their profit margins in the highly competitive industry.

Earlier on Thursday, Fiat's Magneti Marelli division announced it was forming a joint venture with Suzuki Motor and Maruti Suzuki India to make electronic control units for diesel engines.

And Tata, Fiat's partner in India, said it would make premium cars for the Italian automaker in addition to the other vehicles, engines and transmissions they make together.

Some analysts doubted Fiat would be the right partner for Mercedes-Benz. Fiat made cars for the mass market, while its German peer made them for the premium segment, they said.

''The cost and pricing structures are different,'' said one of them.

Analysts said BMW would be a more likely fit because it was a premium brand with a successful small car, the Mini.

REUTERS SR GC1911