FRANKFURT: Troubled US auto maker General Motors is leaning towards Canadian firm Magna as the preferred candidate for a takeover of its European division Opel, reports said on Thursday.

German magazine Der Spiegel, citing internal GM documents, said in its online edition that the Canadian auto parts maker was favoured for its technological know-how, having helped develop the all-terrain BMW X3 model.

The US daily Detroit News meanwhile cited sources close to the matter as saying that GM preferred Magna to Italy's Fiat because Opel employees considered the Canadian firm less likely to close factories.

General Motors Europe on Wednesday said Fiat, Magna and the RHJ International holding company were in the running to take over its Opel unit. The German government said it would choose the preferred suitor early next week.

Fiat boss Sergio Marchionne meanwhile said he believes the Italian auto giant stands a more than 50 percent chance of pulling off its takeover bid for Opel, reports said on Thursday.

"Fiat has a more than 50 percent chance of winning the battle for Opel because, at the end of the day, our offer is the only one based on industrial merit," La Stampa daily cited Marchionne as saying.

The other suitors "do not have that industrial base or are really financiers," Marchionne said.

"We have seen how weak that can be with Chrysler, which was controlled by investment fund Cerberus," he added.

Fiat on Wednesday made a formal offer to take over Germany's Opel and Britain's Vauxhall, two European subsidiaries of General Motors which is on the verge of bankruptcy and being restructured with US government help.

Magna, with support from Russian manufacturer GAZ, and Brussels-based RHJ International, whose main shareholder is the founder of the US investment fund Ripplewood, also submitted offers.

Opel employs 25,000 people directly in Germany and its future is a major concern for the Berlin government.

The final decision on Opel, as well as other units of GM Europe including Britain's Vauxhall and Sweden's Saab, lies with General Motors itself and with the US government, but Berlin will sweeten any deal with loan guarantees.

GM is relying on more than 15 billion dollars (11 billion euros) in emergency government loans and faces a June 1 deadline to complete major restructuring or follow its rival Chrysler into bankruptcy.

Fiat, which has already sealed a tie-up with Chrysler, wants to combine GM's European, Latin American and South African operations with Chrysler's to create the world's second largest carmaker behind Japan's Toyota.

A Fiat takeover of Opel could be judged less desirable to GM since it may allow its rival Chrysler to benefit from Opel technology in Europe.

The Detroit News said that GM still held a grudge against Fiat for forcing it to pay the Italian firm two billion dollars when an attempted tie-up between them fell through in 2005.

It said GM bosses also think Fiat is undervaluing GM's assets. Fiat has offered GM a 10-percent stake in the new company but GM wants 40 percent.

Magna has proposed to let GM retain a stake of up to 40 percent in Opel, the newspaper added.