HANOVER, Germany (Reuters) - Volkswagen is nearing a deal with the IG Metall labor union to raise wages for workers at its German factories, just as Europe's biggest automaker grapples with slowing sales and falling profit.

"We will reach a deal," a spokesman for IG Metall said early on Tuesday. A spokesman for Volkswagen added that some details still needed to be worked out before an agreement could be signed, while declining to provide specifics.

Volkswagen and IG Metall are due to hold a news conference at 10 a.m. (0800 GMT). The wage talks concern about 97,000 production staff at VW's six western German plants and 5,000 employees at the financial services division.

VW, which weathered most of last year's auto sector slump, had urged staff to settle for a "moderate" pay increase as persistent weakness in car demand in core European markets hurts sales and profits.

Deliveries of VW's namesake brand tumbled 10.9 percent in its German home market between January and April and fell 7.9 percent across austerity-strapped western European countries. First-quarter operating profit at the group plunged by a quarter to 2.34 billion euros ($3 billion).

IG Metall meanwhile has said market leader VW could afford to give its workers bigger pay raises than the broader industry.

Earlier this month, IG Metall secured a deal for an inflation-beating wage increase for Germany's 3.7 million engineering and metal workers equivalent to annual pay hikes of about 3 percent.

($1 = 0.7729 euros)

(Reporting by Jan Schwartz; Writing by Maria Sheahan; Editing by Marilyn Gerlach and David Holmes)

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