German Economy Minister Karl-Theodor zu Guttenberg said Fiat had improved its bid for General Motors' Opel unit and said other bidders may be willing to sweeten their offers as well.

Interestingly, Fiat has improved its offer once again and we've received a more thorough blueprint from them in the last few hours, Guttenberg told a group of journalists on Saturday.

We're sensing a willingness to negotiate further from all sides, Guttenberg said although he did not rule out the possibility of a structured insolvency as well.

A Fiat spokesman declined to comment. A GM Europe spokesman also declined to comment on Guttenberg's remarks or on which bidder stood the best chance.

The GM spokesman also declined to comment on a report by the Financial Times on Saturday that China's Beijing Automotive Industry Corp (BAIC) has also expressed an interest in buying a stake in Opel together with the rest of General Motors' European operations.

We welcome any kind of interest, the GM spokesman said.

BAIC sent a letter expressing interest in Opel to Commerzbank's Dresdner Kleinwort unit, which is advising GM on the stake sale, on Thursday - a day after a bidding deadline passed, the FT said citing two people close to the deal.

BAIC's offer was described as an expression of interest rather than a formal bid, and is unlikely to move forward, one of the people said.

So far, Canadian car parts group Magna has emerged as a favorite to acquire Opel after top German officials said Magna had submitted a better plan than rival bidders Fiat and Belgium-listed industrial holding company RHJ International .

Magna co-Chief Executive Siegfried Wolf laid out the company's Opel blueprint in detail on Friday, vowing to retain all four Opel plants in Germany and to avoid mass job cuts, key criteria for politicians ahead of federal election in September.

Magna's plan also envisions raising output at Opel's main plant in Russelsheim to 250,000 cars per year from the 160,000 currently produced despite a reduction in staff.

German weekly Der Spiegel reported in an advance of an article to appear in Monday's edition that Magna wants the government to at least partially cover some of the 3-billion euro pension obligations.

But a government source said Magna had shown itself flexible on the issue. We cannot confirm that report. Magna representatives made it clear that the question of how to deal with Opel's pension obligations were not a prerequisite for the Magna offer, a person familiar with the negotiations told Reuters on Saturday.

German Foreign Minister and Vice Chancellor Frank-Walter Steinmeier described the Magna bid as the only sustainable plan among the three and said it would be examined closely.

The association of Opel dealers (Euroda) welcomed Magna's plan Jaap Timer, head of Euroda, said in a radio interview that a good collaboration with Magna was conceivable and that it was important to have a supplier on board, who did not have its own distribution in the auto sector. However, the dealers had not been in contact with Fiat yet, he said.

But state premiers from the four German states where Opel has plants had diverging views. Most backed the Magna plan but Juergen Ruettgers of North Rhine-Westphalia (NRW) said it was unacceptable and needed changes.

Opel unions voiced opposition to the Magna plan, under which 10,000 jobs would be cut in Europe, including 2,500 in Germany.

The decision on who gets Opel will be taken by GM but the German government will also play a big role because it would likely supply billions of euros in financing guarantees.

Guttenberg and Steinmeier said the government's decision on its preferred bidder would come next week after ministers meet on Monday.

Both General Motors and the German government are in a race against time to finalize a sale of Opel. The U.S. government has given GM until June 1 to restructure its operations and prove it can be viable without state aid, or face probable bankruptcy.

(Reporting by Andreas Moeser, Andreas Kroener and Erik Kirschbaum in Berlin)