STOCKHOLM, Sweden – Stora Enso, the Swedish-Finnish forest products group, is in merger talks with U.S. papermaker International Paper Co., the Swedish business daily Dagens Industri reported Wednesday.

The newspaper, citing sources it did not identify, said the talks have been ongoing for the past year.

But two industry analysts said the chances of a merger are unlikely.

“We think it’s totally unrealistic to expect a deal any time soon,” said Peter Ruschmeier, senior vice president with Lehman Brothers in New York.

Consolidations in the paper industry are possible, but a large merger would run counter to IP’s strategy, which involves cutting costs, reducing debt and improving its performance before making a meaningful acquisition, Ruschmeier said.

Stora Enso declined to comment on the report.

“It’s just a market rumor which we don’t want to comment on,” Stora Enso executive vice president of communications Kari Vainio told Dow Jones Newswires.

Jenny Boardman, a spokeswoman for Stamford, Conn.,-based International Paper, also called the report a rumor. She said the company does not comment on potential mergers and acquisitions.

“We’re not in a position to confirm or deny anything,” she said.

Stephen Atkinson, a research analyst with Nesbitt Burns in Montreal, said a merger would give IP a greater global presence in the paper market.

Stora Enso was formed in 1998 by the merger of Finland’s Enso with Stora of Sweden. It has 45,000 workers and produces magazine paper, newsprint, fine paper, pulp and packaging boards.

In August 2000, it bought Consolidated Papers, North America’s leading producer of coated and glossy printing papers, in a $4 billion deal, and now has 12 factories in Wisconsin and Minnesota, and in Nova Scotia, Canada.

IP, the world’s largest paper company, last year bought rival Champion International for $7.3 billion. The company employs about 110,000 people worldwide.

In Maine, IP has nearly 3,000 employees who work at paper mills in Jay and Bucksport, a container plant in Auburn and a masonite plant in Lisbon Falls. IP also owns 1.4 million acres of land in Maine.

IP reported a loss of $313 million in the second quarter, citing a weak economy, a strong U.S. dollar and costs related to facility closings and the Champion merger. IP, which recently relocated from Purchase, N.Y., to Stamford, announced about 4,000 job cuts during the quarter and in early July.

IP has been selling off nonpaper businesses and downsizing and closing some paper mills to reduce capacity to lift prices.

International Paper shares fell 33 cents Wednesday afternoon to $40.46 on the New York Stock Exchange, while Stora Enso shares rose 77 cents, or 6.9 percent, to $12.02 in Stockholm.