LONDON - Britain's Trading Emissions and Leaf Clean Energy are in early merger talks in a move that would create the largest carbon-focused company listed in London.

Any deal would likely be in shares and constitute a reverse takeover of investment company Leaf, but the valuation basis has yet to be agreed, the two firms said in a joint statement on Monday.

There can be no certainty that an offer will be made for either Trading Emissions or Leaf nor certainty as to the terms of any such offer, if made, they said.

The announcement comes a week after JP Morgan completed its takeover of Trading Emissions' smaller peer EcoSecurities.

Trading Emissions specialises in renewable energy projects and emissions trading instruments, and its portfolio of risk-adjusted carbon credits stood at 53.2 million Certified Emissions Reduction Credits (CERs) as at October 1.

Its shares were up 0.8 percent at 100 pence at 1525 GMT, valuing it at 254 million pounds ($426 million). Shares in AIM-listed Leaf were indicated up 3.6 percent, giving it a market cap of about 177 million pounds.

The companies said that upon completion of the merger, Leaf would apply for its shares to be listed on the main market of the London Stock Exchange.

(Reporting by Victoria Bryan; Editing by Paul Sandle)

($1=.5960 Pound)

United kingdom Climate change