STOCKHOLM, Aug. 22, 2001 (Reuters) - Finnish-Swedish Stora Enso and International Paper are in talks on the world's largest forest industry merger, Swedish daily Dagens Industri reported on Wednesday. 
If the companies were to merge, they would create a forest industry giant with annual sales of more than SEK 400 billion ($38.68 billion). IP is the world's largest papermaker in terms of output and Stora Enso is number two. Dagens Industri said it was basing its reports on sources which it did not identify. 
Officials at Stora Enso were not immediately available for comment. Were a merger to take place, it would create a dominant sector player with a market capitalization of some $30 billion, according to data from Reuters Securities 3000. 
Consolidation has picked up in the forest industry over the past few years as firms try to counter cyclical trends and the slowing global economy. Stora Enso bought US Consolidated Paper in 2000 to vault the firm into number two globally, while sector leader IP bought US Champion International also last year after winning a bidding war with Finnish UPM-Kymmene . 
IP shares ended flat at $41.04 overnight, while Stora Enso shares in Helsinki slipped slightly to Euro 12.32 ($11.29).