Retailer Wal-Mart Stores is setting up a team in London to drive expansion into Europe, The Independent on Sunday newspaper reported.

The world's largest retailer will bring a team to London to look at opportunities for European mergers and takeovers, and has hired Cushman & Wakefield to search for office space for 35-55 people, the newspaper said.

Wal-Mart said in first-quarter results published on Tuesday that key U.S. sales fell 1.1 percent. At Asda, its British arm, sales growth slowed.

A Wal-Mart spokeswoman told Reuters the report was speculation dressed up as fact. (Reporting by Lorraine Turner; Editing by Dan Lalor)