French and Italian finance ministers met Monday in Brussels to try to defuse rising tensions over a contested megamerger in the energy sector that some observers have called the "Suez crisis." But they left with the issue unresolved. Italian officials said that Italy and France remained divided over Suez and that there had been no fundamental change in position.

Thierry Breton, France's finance minister, said discussions with his Italian counterpart, Giulio Tremonti, were "constructive and upbeat." But he emphasized that negotiations on mergers did not take place from state to state, but between companies. Enel, Italy's dominant electricity producer, had indicated it was prepared to make a hostile bid for Suez if the two ministers did not resolve a dispute that has pitted the two countries against each other and raised fears of protectionism in the European Union. The standoff began this month when Italy accused France of thwarting Italian plans to buy the French utility Suez by proposing the merger of Suez with state-controlled Gaz de France after the Italian utility Enel had signaled its interest.

But even as Breton and Tremonti met, Italy's European Union minister, Giorgio La Malfa, urged Enel to bid for Suez, a move that would undermine the interests of the French government.

"Takeovers are either done or not, they can't be invented so if Enel has the possibility to do one, they should," La Malfa told Bloomberg News.

The comments by La Malfa are the latest salvo in an escalating slinging match between Italy and France. While Paris has strenuously rejected Rome's allegations that it purposely set out to derail an Italian bid for Suez, Tremonti has previously likened France's behavior to the chain of events that led to World War I.

Enel could make an offer by the end of this week, according to a person with direct knowledge of the situation.

Italy's annoyance at what it deems blatant economic nationalism by France has provoked an inquiry by the European Commission.

On Monday, Austria, which holds the EU's rotating presidency, lashed out at growing signs that countries were erecting barriers in the EU's single market.

"We have to be clear that any government interference and discriminatory action against foreign companies is just unacceptable," said Karl-Heinz Grasser, Austria's finance minister.

On Monday, Prime Minister Jose Luis Rodriguez Zapatero of Spain claimed the EU was not succumbing to economic nationalism, saying that moves by France and Spain to block foreign bids for domestic energy companies were due to energy security. At a Madrid meeting with his French counterpart, Dominique de Villepin, the two said they would work together to create a common energy policy for Europe that gave it more control over its energy supply. In the case of France, the tie-up between Suez and Gaz de France was announced only after negotiations between Enel and another French utility, Veolia Environnement, to buy Suez were suddenly disrupted, prompting EU suspicions that the French government derailed the Italian bid.

Enel alleges that pressure was put on Veolia to pull out of the deal after the intervention of President Jacques Chirac of France.