Defence and aerospace specialist BAE Systems has emerged as a contender to buy US firm TRW.

The company, rocked by the fallout from September 11, has confirmed that it has entered into talks to buy the US aerospace and automotive group, which employs more than 500 staff at plants in Peterlee, County Durham.

In a brief statement, BAE said it viewed TRW as an "opportunity" to extend its defence activities in the US.

TRW is already the subject of a £4.59bn bid by US defence group Northrop Grumman but the hostile offer has been extended twice and lapses on Friday. BAE was rocked by September 11, slashing thousands of jobs as demand from the commercial aviation sector fell away.

But it has stuck by its long-term strategy of building up its US presence and is already a significant supplier to the Pentagon.

It has a number of US interests but any sale of TRW will need to be approved by the US government.

BAE, like rival Northrop Grunman is believed to be only interested in TRW's defence and aerospace interests.

Analysts believe neither firm would want to retain TRW's automotive arm, which employs the staff in County Durham.

If a deal is struck with either BAE or Northrop, they would seek a buyer for the automotive division, putting the jobs of the North-East workforce under threat.

Possible buyers for the automotive division could include GKN, Federal-Mogul or the Lear Corporation.

TRW employs about 6,000 workers in Britain, many in the car components business. Its operations in Peterlee manufacture seat belts and air bags.