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

The report comes just days after Fiat CEO 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.

Analysts have said a PSA-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 minivans.

The companies combined made 6.2 million units last year, about the same as Volkswagen and Renault-Nissan.

The combined output would make Fiat-PSA the world's fourth-biggest automaker by production along with VW and Renault-Nissan after Toyota, General Motors and Ford Motor.

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

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

A PSA 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. Fiat and PSA spokesman had no immediate comment.