The move would see both automaker benefit by cutting costs, building scale and spreading the load of heavy investments in new technologies, such as hybrid and electric vehicles, over large numbers of cars.
A potential partnership between Renault and Daimler – which would also include Renault's Japanese alliance partner, Nissan – has not been confirmed by Renault CEO Carlos Ghosn who said only that he was open to equity exchanges.
"We are open to exchange of shares ... but exchange of shares is not an end by itself ... it is a way to solidify co-operation between partners." said Mr Ghosn.
Although it seems Daimler is not quite as optimistic about the benefit of a merger, with Daimler's CEO Dieter Zetsche reluctant to commit to a new pact after a costly venture with Chrysler.
"It would not be particularly logical. Joining the alliance means organizing joint programs, making long-term plans together ... in my view it's not on the agenda." said Societe Generale analyst Philippe Barrier.
Despite the lack of any firm agreements or decisions, both Renault's and Daimler's shares were up 2.3 per cent at the close on Tuesday.