Anglo-Dutch steelmaker Corus has said it is talks with Brazilian counterpart Companhia Siderurgica Nacional (CSN) over a possible merger.

A tie-up between the two companies would create a transatlantic steel giant with annual production of about 23 million tonnes.

However, Corus downplayed expectations of a deal.

"There can be no assurance that current discussions will result in any transaction between the parties," Corus said in a statement.

A merger with CSN would shore up Corus' global position, helping to offset the impact of steel import tariffs imposed by the US earlier this year.

CSN confirmed it was in talks with Corus but said it was involved in discussions with several companies.

Tough market conditions

On Thursday, the US Commerce Department said it had put off a decision on which foreign steel companies would gain a partial exemption from the tariffs.

Corus, created three years ago by a merger between British Steel and Dutch steel producer Hoogovens, made a �462m ($701m) loss in its latest financial year, blaming the economic slowdown and global overproduction.

Three months ago, it announced plans to sell off its profitable aluminium business as part of a drive to refocus on its core steel operations.

It is also planning to sell its stainless steel division Avesta.

Corus is mid-way through a round of redundancies, having announced plans to axe about 12,000 jobs last year.

Corus shares slid 7.0% to 79p, before recovering to close at 85.5p, up 0.5p.