MILAN (Reuters) - The Italian post office denied on Sunday a report it was interested in merging with troubled Tuscan lender Banca Monte dei Paschi di Siena (>> Banca Monte dei Paschi di Siena SpA).

"Poste Italiane states none of the merger or acquisition ideas put forward (in the report) with regard to the restructuring of the banking sector are part of its plans," the group said.

Italian newspaper La Repubblica said on Sunday that Rome was looking at a possible tie-up of the post office's banking division and Monte dei Paschi after attempts to engineer a three-way merger with cooperative banks fell through.

The paper said the operation could involve other parties too.

Last week sources said Italian authorities were exploring a merger of Monte dei Paschi with UBI Banca (>> Unione di Banche Italiane SpA) and Banca Popolare di Milano (>> Banca Popolare di Milano) to create a national champion.

Monte dei Paschi is looking for a partner to shore up its balance sheet and help it cope with a pile of soured loans that has spooked investors and wiped 45 percent off its share value since the start of the year.

The government, which owns 64.7 percent of the post office, has a small stake in the Tuscan lender. It is seeking to accelerate consolidation of the banking sector to make it more efficient.

"Rumours that the group (the post office) is interested in buying Monte dei Paschi are totally groundless," a Treasury source said on Sunday.

Poste Italiane, which makes about 80 percent of its revenue from financial and insurance products, denied similar press rumours of a merger with Monte dei Paschi earlier this month.

(Reporting by Stephen Jewkes and Giuseppe Fonte; Editing by Andrew Bolton)