MILAN (Reuters) - Italian luxury group Prada is set to make a decision this week about a potential takeover of smaller rival Versace, a source close to the matter said on Sunday, as the negotiations enter a final phase.

A deal to buy Versace, owned by New York-based Capri Holdings, would unite two of the biggest names in Italian fashion.

Italy's Corriere della Sera newspaper reported on Sunday that a potential deal could be announced on Thursday, April 10 and the price for loss-making Versace could be reduced to 1 billion euros ($1.1 billion), one third lower than initial reports had indicated.

Italian daily La Repubblica reported on Saturday that Capri Holdings' Chief Executive John Idol is expected in Milan in the coming days to discuss the deal.

Prada got exclusive four-week access to Versace financial data in late February, a period which has since been extended, according to media reports.

President Donald Trump's new tariffs have since sent shockwaves through global markets, adding an extra layer of complexity to the negotiations.

Versace, where former Miu Miu designer Dario Vitale assumed Donatella Versace's role as Chief Creative Officer this month, was bought by Capri Holdings for 1.8 billion euros in 2018, but has recently been operating at a loss.($1 = 0.9128 euros)