TOKYO, April 2, 2008 (AFP) - Toyota Motor is holding talks with Fuji Heavy on enhancing business ties, an official said Wednesday following reports that the auto giant plans to double its stake in the maker of Subaru cars.

'We are holding consultations in various areas' with Fuji Heavy, Toyota spokeswoman Shiori Hashimoto said.

Toyota 'wants to enhance ties in various sectors,' she said, but adding that nothing had been decided on whether to buy more shares in its partner.

The Nikkei business daily reported that Toyota planned to pay 30 billion yen (295 million dollars) to raise its stake in Fuji Heavy to 17 percent, from the current level of 8.7 percent.

Fuji Heavy said in a statement: 'Nothing has been decided on expanding our capital ties.'

As part of the alliance, Fuji Heavy produces Camry vehicles in North America for Toyota, which in turn helps its partner in environmental technologies.

Toyota, which has been competing closely with General Motors (GM) of the United States for the title of the world's largest carmaker, bought its present stake in Fuji Heavy from GM in 2005.

Shares of Fuji Heavy soared 6.56 percent to 438 yen on the Tokyo Stock Exchange Wednesday on hopes that stronger ties with Toyota will improve the Subaru brand-makers financial position and business efficiency.

Toyota shares rose 4.38 percent to 5,240 yen, roughly in line with a 4.21 percent surge in the key Nikkei-225 index, as some analysts reacted cautiously to the report.

'It does not make sense for Toyota to raise its stake in Fuji Heavy to that level,' said Shotaro Noguchi, an analyst at Mitsubishi UFJ Securities.

'If the reported plan was for Toyota to make Fuji Heavy a consolidated subsidiary to take in the Subaru brand or the boxer engine technology, it would have made a little more sense.

'But even if that was the plan, Toyota's gain would be minimal, as seen in the limited sales volume of Subaru cars,' said Noguchi.