Two of the world’s biggest toy companies, Mattel and Hasbro, are reported to have renewed talks about a possible merger that would bring together the makers of Barbie and the current licence holders of the lucrative Star Wars toy franchise.

The combined stock market valuations of the California and New England-based companies rose to over $20bn last night with Mattel shares having a 8.2% bounce, while Hasbro's climbed by 3.3%.

Mattel, which specialises in toys aimed at girls, has come under pressure in Europe from resurgent Lego sales.

It faces further challenges in the year ahead as some Disney toy licensing rights switch to Hasbro, which specialises in toys aimed at boys.

This follows previous reports from Bloomberg which said that the two parties held talks last year. The companies also considered joining forces in 1996.

Neither firm has commented on today's reports.

Hasbro is due to release quarterly earnings for it's holiday quarter on Monday.