MILAN (Reuters) - France and Italy are considering a potential tie-up between automakers PSA Peugeot-Citroen SA and Fiat SpA, Milano Finanza newspaper said on Saturday.

The report comes just days after Fiat Chief Executive Sergio Marchionne said the Italian company needed to find a partner to survive the crisis besetting the car sector.

Italian Prime Minister Silvio Berlusconi and French President Nicolas Sarkozy have tackled the issue of a possible tie-up, Milano Finanza said, citing sources close to Berlusconi's office.

The issue coincides with Berlusconi's office examining possible aid to the auto sector, it said.

A Peugeot tie-up could be touched on when John Elkann, chairman of holding company IFI, Fiat's controlling shareholder, meets Berlusconi on Wednesday, the paper said.

A spokesman for Berlusconi's office said there was no official comment on the report. A Fiat spokesman had no comment.

Analysts have said a Peugeot-Fiat tie-up would make commercial sense since both have strong positions in small cars. They also have two joint ventures in commercial vehicles and mini-vans.

The companies combined made 6.2 million units last year, roughly the same as Germany's Volkswagen AG and France's Renault-Nissan.

The combined output would make a combined Fiat-Peugeot-Citroen the world's fourth-biggest automaker by production after Toyota Motor Corp, GM and Ford Mazda, at a shared podium with Renault-Nissan and VW.

Peugeot has said it is not looking to add to its alliances but is willing to discuss deepening its existing relationships.

There was no immediate comment on Saturday from PSA.

Fiat's Marchionne said in an interview with Automotive News published on Monday that he expected the auto industry to consolidate in the next two years, leaving six players to compete globally.