The company already runs some services in Europe

The Sunderland-based train and bus operator is looking at opportunities to run trains in Germany, according to a report.

The group, which runs services in northern England and Wales, is also looking at expanding its services in Italy and Portugal, where it runs buses.

It already runs trains in Jutland in Denmark and Groeningen in the Netherlands.

Bob Davies, the chief executive, told the Financial Times that German state-owned railway Deutsche Bahn had lost much of its market share to local, municipally-owned companies.

He said: "That to me creates a huge opportunity for a commercial operator."

Arriva runs the Arriva Trains Northern franchise in the North East and began operating the new Wales & Borders franchise in December.

In December, the company lost its bid to run a new northern rail franchise when it was not on a shortlist announced by the Strategic Rail Authority.

The franchise, which starts in autumn 2004, will include rural and urban services throughout the whole of the north of England, including the Greater Manchester, South Yorkshire, West Yorkshire and Tyne & Wear Passenger Transport Executive (PTE) areas.