LONDON Shares in British lender HBOS HBOS.L
rose more than 12 percent on Wednesday, lifted by market talk
of bid interest from Spanish rival BBVA (BBVA.MC) and a broad
recovery across the financial sector, traders said.
"There is a suggestion BBVA may be looking at HBOS," one
trader said, adding this was helping HBOS shares track higher.
Several other traders also quoted the market rumour.
Both BBVA and HBOS declined to comment.
HBOS shares were trading up 10.6 percent at 288.8 pence at
1042 GMT, beating the FTSE bluechip index, up 1.3 percent, and
topping the day's gainers.
Britain's largest mortgage lender has underperformed the
battered sector in the run-up to its 4 billion pound ($8
billion) rights issue, and concerns over the overhang effect
have also weighed, as just 8.3 percent of the shares were taken
BBVA shares were up 3.5 percent at 12.35 euros and the DJ
Stoxx European banking sector index .SX7P was up 4.6 percent.
A deal to take on HBOS would be a radical departure for
BBVA, Spain's second-largest bank, which has focused its
expansion on emerging markets in Latin America and China and in
the southern United States.
Chairman Francisco Gonzalez has said he would be interested
in growing further in the United States once the market settles
a bit and BBVA fully merges the four banks it bought there.
He has also said he would like to get into business in
expanding markets like Russia and Brazil but possibly by
offering services via the Internet rather than by buying banks
to get a physical foothold.
At Wednesday's prices, HBOS was worth about 15 billion
pounds ($30 billion) while BBVA was valued at 46.3 billion
euros ($73.7 billion).
(Additional reporting by Jane Barrett in Madrid and Clara
Ferrera-Marques in London)
(Reporting by Sitaraman Shankar and Michael Taylor; Editing
by David Cowell)