Shares in PSA Peugeot Citroen, Europe's second-biggest car manufacturer by sales, surged on Wednesday after it was confirmed to be in alliance talks with Detroit-based General Motors.

After Peugeot Citroen said it was in talks about "possible cooperations and alliances," France's labor minister confirmed the negotiations were with GM.

Shares in the company jumped 17 percent to euro16.82 in early Wednesday trading.

For GM, the talks raise the possibility that it might find a solution for its money-losing Opel and Vauxhall brands in Europe. GM Europe lost 700 million last year.

French Labor Minister Xavier Bertrand said on France's radio Europe 1 on Wednesday that Peugeot head Phillippe Varin "informed me yesterday of these discussions" but added that "it's up to him to talk about the specific details." An Opel spokesman declined comment.

Peugeot Citroen, second in Europe only to Germany's Volkswagen AG, had said late Tuesday that "in the framework of its strategy of globalization and performance improvement, PSA Peugeot Citroen is examining cooperation and alliances."