European Aerospace group EADS said Tuesday it was surprised by a German press report that its merger talks with BAE Systems had failed, saying significant progress had been made. “We are surprised to see the reports from Berlin,\" an EADS spokesman said following a report by the German news agency DPA saying the talks had failed, citing a source close to the negotiations. \"Only this morning, we have received the information that France and the UK have made significant progress on the issue that was blocking the negotiations for the last few days,\" the EADS spokesman said in a statement. \"The two companies will discuss the situation and possible steps forward this afternoon,\" he added. Earlier EADS said the heads of the two companies would meet later Tuesday and decide whether or not to continue the talks on a merger to create the world\'s top group in the fields of civil and military aerospace. Under British takeover rules they have to say by 1600 GMT on Wednesday whether they have agreed on a merger, ask for more time to continue talks, or abandon a tie-up.