Berlin  - The bidding for control of German carmaker Opel goes into a final round on Wednesday when Chancellor Angela Merkel's government holds talks with all interested parties in Berlin.

Contrary to earlier expectations, the government is not expected to name its preferred candidate to take over the loss-making General Motors' European subsidiary.

Instead, it is expected to keep open its options so it can react to developments in the United States where GM is likely to seek bankruptcy protection on June 1.

Merkel is holding separate meetings on Wednesday with GM top management and the chiefs of the bidding companies - Italian carmaker Fiat, Canada-based parts manufacturer Magna and the European arm of US finance investor Ripplewood.

Senior German ministers, US government officials and the premiers of four states where Opel's German factories are located are also due to attend.

Sources close to the talks said the German side was expected to make known its preference to GM, but would not rule out any of the three concepts put forward to bail out Opel.

A preliminary agreement is seen as necessary for Opel to take advantage of a 1.5-billion-euro (2.1-billion-dollar) bridging loan backed by the government before a final deal is sealed.

All three bidders are reportedly looking to take advantage of government-backed loan guarantees amounting to between 4-5 billion euros in the event of a final deal.

Opel, which employs 25,000 people in Germany, is the cornerstone of GM's operations in Europe, which include Vauxhall plants in Britain and Saab in Sweden, as well as factories in Spain, Poland and Belgium.

German officials have privately expressed preference for Magna, which is proposing to bring in Sberbank of Russia as an investor and make additional Opel cars at GAZ factories in Russia.

But insolvency is also an option, according to Economics Minister Karl-Theodor zu Guttenberg, whose office was forced Wednesday to deny a news report he was considering a break up of Opel.

"Anyone ruling out orderly insolvency as an option is not only endangering taxpayers' money but also weakening our negotiating position," zu Guttenberg told a newspaper, the Hamburger Abendblatt.

Insolvency is vehemently opposed by Opel employees, who fear it would lead to massive layoffs and prompt potential customers to turn to alternative car suppliers.

"The workers are angry. It is incomprehensible to be talking of insolvency when there are bidders interested in buying Opel," said Klaus Franz, head of the company's employees council.

The future of Opel has become a political issue in Germany as the two parties in Merkel's ruling coalition seek to position themselves ahead of a general election on September 27.

Both the chancellor's conservative Christian Democrats and her left-of-centre Social Democratic ally are keen to present themselves as defenders of German jobs.

Merkel met Sunday with executives of parts maker Magna and on Tuesday conferred with Sergio Marchionne, chief executive of Fiat. Both companies improved their offers after zu Guttenberg described them as unsatisfactory over the weekend.(dpa)