Germany's Bild newspaper reports Michael Schumacher is close to signing a deal with Mercedes to come out of retirement and compete in Formula One next year.

Mercedes took over the Brawn team and signed Germany's Nico Rosberg for 2010, but has yet to name his team mate. Media speculation keeps swirling around the retired 40-year-old German former world champion.

The printed report said a deal with Schumacher could be announced as soon as next week, but did not cite any sources.

Schumacher himself declined to answer when questioned at a kart track in Germany on Saturday.

Schumacher was lined up for a brief comeback this year as a stand-in for Ferrari driver Felipe Massa, but had to pull out due to his own neck injury.

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