By Allison Lampert, Andrea Shalal and Tim Hepher

MONTREAL/WASHINGTON/PARIS (Reuters) - Airbus <AIR.PA> on Tuesday called off talks with Bombardier <BBDb.TO> over propping up the troubled CSeries jet, leaving the Canadian plane maker facing dwindling options to keep alive its dream of competing in the aerospace big league.

The latest blow to Bombardier, which has been trying to shore up its shrinking cash reserves for months, came after Reuters reported that Bombardier had made an offer to Airbus.

Both companies acknowledged that talks had taken place. A person familiar with the situation said Airbus had ended the talks shortly after they became public.

Under the proposed tie-up, Airbus would have helped Bombardier complete development of the troubled aircraft in exchange for a controlling stake in the program, effectively ending Bombardier’s independent efforts to break into the lower end of the global airplane market dominated by Airbus and Boeing <BA.N>.

Bombardier is likely to take a strategic pause and regroup after the sudden end to what some executives had seen as promising possibility, according to one source.

Among the options were reviving contacts with Chinese investors, and potentially Boeing <BA.N>, as well as a renewed drive to sell stakes in the company’s rail and business jet units, the source said.

Bombardier shares jumped 13 percent on the Toronto Stock Exchange immediately after Reuters reported the approach, ending the day up 15 percent at C$1.77. The shares are still worth less than a quarter of their value in July 2008, when Bombardier officially launched the CSeries jet.

After the report, Airbus confirmed that it had been exploring business opportunities with Bombardier but that such discussions were no longer being pursued.

Bombardier then confirmed it had held talks with Airbus about "certain business opportunities," but those discussions were no longer under way. It said it would continue to "explore initiatives, such as a potential participation in industry consolidation" but gave no further details.

The Montreal-based company, which has so far received a total of 243 firm orders for the jet, was unable to win a single order at the Paris airshow in June and is still short of its target of 300 firm orders by the time the aircraft enters service, set for 2016.

Even for an industry prone to long delays and cost overruns, the development of the CSeries has been rocky.

The project has battered Bombardier's balance sheet. As of June 30, Bombardier had $9 billion in long-term debt and $3.1 billion in cash on hand, after burning through some $808 million in free cash flow in the quarter.