* Dixons, Carphone in "very preliminary" merger talks

* Firms say no decision reached on structure of any deal

* Takeover Panel sets March 24 deadline for any offer

* Dixons shares up 8 pct, Carphone up 0.3 pct

(Adds detail, background, analyst comment)

By James Davey

LONDON, Feb 24 (Reuters) - Britain's Dixons Retail DXNS.L and Carphone Warehouse CPW.L are in merger talks that could create an electrical goods and mobile-phone group with a market capitalisation of more than 3.4 billion pounds ($5.84 billion).

A combination of Dixons, Europe's No. 2 electricals retailer, and Carphone, Europe's largest independent mobile-phone retailer, would probably place the merged group in Britain's FTSE 100 index of leading companies.

"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 joint statement to the London Stock Exchange.

They said the talks were at a "very preliminary" stage and there was no certainty a transaction would occur. They added that no decision had been reached regarding the structuring of any merger.

Analysts said an all-share merger of equals seemed the most likely deal. At their closing prices on Friday, Carphone was valued at 1.77 billion pounds, Dixons at 1.72 billion pounds. Shares in Dixons were up 8 percent at 1134 GMT, Carphone's up 0.3 percent.

"In a world of connected devices, Dixons is under-exposed to the key area of mobile/smartphone retailing, and it is known that they were looking at the area," said independent retail analyst Nick Bubb. "It is a bold move for Dixons; it is slightly harder at this stage to see what's in it for Carphone."

Dixons Chief Executive Seb James has made no secret of his desire to increase the company's exposure to mobile phones. Strong demand for smartphones and tablets in Britain has been driving Carphone's share price rise, offsetting weakness in its French business. ID:nL5N0KV0NJ

Analysts said key to any deal would be the stance taken by Charles Dunstone, who founded Carphone in 1989, is its chairman and is its largest shareholder with a 23.5 percent stake.

Britain's Takeover Panel will require the companies to announce by March 24 a firm intention to make an offer.

Shares in Dixons, which trails Metro's MEOG.DE Media-Saturn by annual sales, have soared 74 percent over the last year, ahead of gains of 51 percent in Carphone Warehouse's stock and against the 21 percent rise posted by Britain's midcap index .FTMC , of which they are both constituents.

Dixons 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 year, it has offloaded the loss-making e-commerce business PIXmania and operations in Turkey and has partially exited Italy.

U.S. retailer Best Buy BBY.N ended a joint venture with Carphone Warehouse last April by selling its stake back to the European firm. Plans to build a chain of European megastores had collapsed because of weak consumer spending and competition from local chains. ID:nL2N0DH0U4

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 and Citigroup C.N its adviser. ($1 = 0.5993 British pounds)

(Reporting by James Davey; additional reporting by Brenda Goh, Sarah Young and Anjuli Davies)

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

Keywords: DIXONS CARPHONE/