Tata Steel may be considering breaking off talks over a planned merger of its European business with German conglomerate Thyssenkrupp, a UK media report claimed today.

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The merger talks had been revealed by the Indian steel giant last year as part of a major restructuring of its UK steel business.

Such a deal with the German steel major could potentially lead to the formation of a European steel behemoth with blast furnaces in Wales, the Netherlands and Germany. However, 'The Sunday Times' claims that the deal may be under threat due to German pension liabilities.

The deal has been slow moving as Tata Steel tries to solve the problem of its own 15-billion-pound British steel pensions scheme.

Last month its UK workers had voted in favour of a new pension deal to save their jobs. Nearly 10,000 workers voted in a ballot in favour of moving from a final salary pension to a less generous scheme in return for job safety and Tata's promise of nearly 1-billion-pound worth of investment over the next 10 years.

According to the newspaper, Dutch unions representing workers at Tata's vast Ijmuiden plant have raised concerns over the Thyssenkrupp pensions, which are an unfunded liability and underpinned by cash-flow from the steelworks.

Thyssenkrupp is under pressure from the activist investor Cevian and recently sold its steel venture in Brazil for 1.3 billion euros.

Thyssenkrupp, a vast conglomerate ranging from escalators to car axles, is reportedly already considering an alternative for its steel business should the deal with Tata fail ? floating it as a standalone company.

"Talks are ongoing with Thyssenkrupp and to find a sustainable solution for the UK pension scheme," Tata Steel said in a statement.

Tata Steel, which owns the UK's largest steelworks at Port Talbot in South Wales among other units, has been working on finding a solution to the crisis in the?steel?industry since it announced a major restructuring in March 2016.