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LONDON, Feb 24 (Reuters) - Dixons Retail DXNS.L , Europe's No. 2 electricals retailer, and Carphone Warehouse CPW.L , Europe's No. 1 independent mobile phone retailer, said on Monday they are in merger talks.

"The boards of Dixons and Carphone Warehouse note the recent speculation and confirm that the two companies are in preliminary discussions regarding a possible merger of Dixons and Carphone Warehouse," the firms said in a statement.

They said the discussions are at a very preliminary stage and there was no certainty a transaction will be forthcoming.

They said no decision has been reached regarding the structuring of any such merger.

The companies, which are both being treated as offeree companies, are required to announce a firm intention to make an offer not later than March 24.

Shares in Dixons were up 4.8 percent at 1013 GMT, while Carphone's were up 1 percent.

At their closing prices on Friday, Carphone Warehouse was valued at 1.77 billion pounds ($2.95 billion) while Dixons was valued at 1.72 billion pounds.

Shares in Dixons, which trails Metro's MEOG.DE Media-Saturn by annual sales, have increased 74 percent over the last year as it has increasingly focused on markets where it has a leading "multi-channel" position with a combined stores and internet business. ID:nL5N0KQ0N9

Over the last six months the firm has offloaded the loss-making e-commerce business PIXmania and operations in Turkey and partially exited Italy.

Chief Executive Seb James has made no secret of his desire to increase the firm's exposure to mobile phones.

Carphone Warehouse's share price has risen 51 percent over the past year as strong demand for smartphones and tablets in Britain has offset weakness in France. ID:nL5N0KV0NJ

U.S. retailer Best Buy Co Inc BBY.N ended its joint venture with Carphone Warehouse in April last year by selling its stake back to the European firm, after plans to build a chain of European megastores collapsed due to weak consumer spending and competition from local chains.

According to its website Carphone's brokers are UBS

UBSN.VX and Deutsche DBKGn.DE and its advisers are Credit Suisse CSGN.VX .

Dixons' broker is Barclays BARC.L while Citigroup C.N is its adviser. ($1 = 0.5993 British pounds)

(Reporting by James Davey; editing by Brenda Goh)

((james.davey@thomsonreuters.com)(+44 20 7542 7674)(Reuters Messaging: james.davey.thomsonreuters.com@reuters.net))

Keywords: DIXONS CARPHONE/