DETROIT (Reuters) –
Talks on a deal to sell Chrysler LLC to Nissan Motor Co (7201.T) and Renault SA (RENA.PA) have halted because the No. 3 U.S. automaker's owner favors a deal with General Motors Corp (GM.N), The Detroit News reported on Saturday.

Citing sources familiar with the situation, the newspaper said no further talks have been scheduled between private equity firm Cerberus Capital Management LP (CBS.UL), which sees a deal with No. 1 U.S. automaker GM as financially more advantageous and better for the struggling U.S. auto industry.

In an earlier report, The Detroit News said the Nissan-Renault alliance had proposed buying 20 percent of Chrysler.

A spokesman for Cerberus declined to comment.

Earlier this week Nissan-Renault Chief Executive Carlos Ghosn dismissed reports of merger talks with Chrysler as speculation, adding that it did not make sense to risk cash in the current economic environment to form a strategic alliance.

GM and Chrysler have been in talks on a possible merger, but according to sources any deal will have to wait until after the U.S. presidential elections on Nov 4 as the Bush administration ruled out providing government funding for it.

(Reporting by Nick Carey, editing by Alan Elsner)