Google Inc is in active talks with number-two U.S. mobile carrier Verizon Wireless about putting Google applications on phones it offers, people familiar with the matter told Reuters on Tuesday.

There are good useful talks going on and they could result in a deal, one of the sources said.

So far talks between the Web search leader and Verizon Wireless, owned by Verizon Communications and Vodafone Group Plc, revolve around technology and potential business models such as advertising-sponsored services, one of the people said.

Verizon Communications Chief Operating Officer Denny Strigl said during an investor call on Monday that the operator talks to a lot of companies including Google, but did not elaborate.

France Telecom on Tuesday denied its mobile business, Orange, was in talks with Google to introduce handsets running its software after it was named as a potential partner in a Wall Street Journal story earlier on Tuesday.

Google shares rose 2.3 percent on Tuesday to $694.77.

The Journal reported that Google was expected in two weeks to announce advanced software and services, enabling handset makers to sell Google-powered phones by mid-2008, citing people familiar with the matter. Google declined to comment.

Google has moved rapidly in the past year to extend its reach beyond text-based, pay-per-click Web search ads into a variety of new markets, including online video, television, radio and print advertising.

Google has also expanded into enterprise software, which has traditionally been Microsoft Corp's domain.

According to the Journal, the Google-powered phones are expected to meld several of its applications, including Google Maps, YouTube and Gmail.

The ground-breaking part of the plan, according to the newspaper, is Google's aim to make the phone's software open, right down to the operating system which controls applications and interacts with hardware.

This will grant independent software developers access to the tools they need to build phone features, the Journal said.

(Reporting by Sinead Carew, Ritsuko Ando, Michele Gershberg and Justin Grant in New York, Astrid Wendlandt in Paris)