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Mitsubishi Heavy Industries Ltd. is in negotiations with General Electric Co. to supply its U.S. rival with diesel engines used to generate electric power, company sources said Tuesday.

If a deal is clinched, it will be the first of its kind between the two companies.

MHI plans to provide midsize engines for use in such locations as factories and hospitals, the sources said, adding that demand for such engines has been growing in the United States.

GE, the world’s largest manufacturer of large generators, has adopted a strategy to procure midsize generators from other manufacturers.

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