International Inc. said yesterday it remains in merger talks with a major telecommunications company, despite media reports that said discussions ended with new bidder Deutsche Telekom AG.

"We are still in talks,'' Qwest spokesman Tyler Gronbach said. Qwest (Q.N), the US long-distance company set to buy US West Inc. (USW.N), said it would have no further comment unless the companies reached an agreement or terminated discussions.

Qwest on Sunday said it was holding merger talks with a new suitor, which sources familiar with the situation identified as German telephone giant Deutsche Telekom (DTEGn.DE)(DT.N).

Qwest only acknowledged the talks after U S West demanded on Friday that its merger partner reveal any discussions with an outside party and warned it would hold Qwest responsible for any damages to their existing $36 billion merger pact.

The New York Times reported yesterday that negotiations between Qwest and Deutsche Telekom were "dead in the water'', citing an executive close to talks.

A US source familiar with the situation told Reuters that the New York Times report was "dead wrong'' and negotiations are ongoing. US West declined to comment.

Shares of Qwest hit an intraday low of 50-1/4 but recovered somewhat after the company said merger talks were ongoing. At midday, the stock traded at 53, down 3-1/16, on the New York Stock Exchange.

Shares of U S West gained 2-1/2 to 70-5/8, while Deutsche Telekom's American Depositary Receipts (DT.N) fell 2-5/8 to 92-3/8, also on the NYSE.

Deutsche Telekom, which has made no secret of its desire to enter the US market, still may find the prospects of a three-way deal with Qwest and US West too complicated or costly, traders said.

The German company could find other takeover targets that would ease its entry into the US Deutsche Telekom previously held merger talks with Bermuda-based Global Crossing Ltd. (GBLX.O), but no discussions have taken place in the past six weeks, sources familiar with the situation said.

Global Crossing's Chief Executive Leo Hindery said yesterday that his company is not for sale. He cautioned, however, that no company he has ever run has been for sale, but he "sold a bunch of them''.

Hindery sold cable television company Tele-Communications Inc. to AT&T Corp.

last year.

Defensive: Joe Nacchio, head of QWest, fends off questions about the merger between his company and US West in Denver yesterday.