By Giuseppe Fonte, Valentina Za and Elvira Pollina

ROME, Feb 26 (Reuters) - Italy is reluctant to explore a potential tie-up with Worldline among options it is weighing to revive the fortunes of payments champion Nexi, three sources said, as Rome expects France would oppose the job cuts that would be needed to make a deal work.

Rome, which this month raised its indirect stake in Nexi, would consider instead taking the company private with some co-investors to turn it around away from market scrutiny and cut the debt load it has piled up by growing rapidly through acquisitions, one of the sources added.

Nexi NEXII.MI and Worldline WLN.PA, which has the French government as a leading indirect shareholder, are Europe's top two payments companies.

Both groups and Italy's Treasury had no immediate comment on the sources' remarks.

A tie-up has long been seen as an obvious way for the EU to build a stronger player to rival U.S. giants such as PayPal PYPL.O, MasterCard MA.N or Visa V.N. PayPal and JPMorgan Payments said on Tuesday they were teaming up to expand services for UK and European merchants.

In calling for lower reliance on non-European payments providers, the European Central Bank has blamed the sector's fragmentation as a factor hindering investments.

But the three sources familiar with the matter poured cold water on a potential deal, saying job cuts would more heavily hit Worldline, whose workforce of 18,000 staff compares with 10,500 at Nexi.

With shares in Nexi and Worldline trading near record lows, investment bankers have studied a tie-up and pitched it to shareholders, a person with knowledge of the matter separately told Reuters.

The sources said Italy also deemed the regulatory backdrop as too complex, given the two companies operate in many countries.

There have been no concrete discussions between Italy and France, the sources said, neither at a government level nor between their equity investment arms.

French investment agency Bpifrance has an 8% voting stake in Worldline, while Italian state lender Cassa Depositi e Prestiti $(CDP)$ this month raised its Nexi stake to 18.25%.

Nexi trades at roughly half the 9 euros a share at which it listed in 2019.

While some of Nexi's fund shareholders are widely known to be considering an exit given the number of years they have been invested in the firm, the company has drawn interest from other private equity firms.

The depressed share makes it hard for Nexi's fund shareholders to exit, especially as they have very different entry levels, sources have previously said.

Worldline's shares have fallen by 91% since mid-2021 when investor enthusiasm for payments companies peaked, after recording three profit warnings within a year and parting ways with long-standing CEO Gilles Grapinet in September.

(Reporting by Giuseppe Fonte in Rome, Valentina Za and Elvira Pollina in Milan, Florence Loève in Paris; editing by Mark Heinrich)

((giuseppe.fonte@thomsonreuters.com; +390680307711;))