(Reuters) - Nissan Motor's ( NSANF ) largest shareholder Renault is open to the Japanese automaker pursuing merger talks with peer Honda Motor ( HMC ), Bloomberg News reported on Wednesday.

Japanese auto giants Honda ( HMC ) and Nissan ( NSANF ) are in talks to set up a holding company, according to a person with knowledge of the matter, a move that could help them share more resources to face tough competition.

Renault is open in principle to a deal that could strengthen Nissan ( NSANF ), but it will carefully assess any proposal made to the Japanese company to ensure its own interests are protected, the report said, citing people familiar with the matter.

"On principle, Renault Group supports Nissan ( NSANF ) efforts to restore business situation," a spokesperson for the French automaker said on Wednesday, but declined to comment on the current merger talks.

The talks, first reported by the Nikkei newspaper, would allow Honda ( HMC ) and Nissan ( NSANF ) to cooperate more closely on technology and better compete in the electric vehicle race.

(Reporting by Shivansh Tiwary in Bengaluru and Gilles Guillaime in Paris; Editing by Shilpi Majumdar and Arun Koyyur)