LONDON Shares in British aerospace group BAE Systems (BAES.L) rose sharply on Tuesday, with four traders citing market speculation of interest in the company from U.S. group Lockheed Martin (LMT.N).
"Vague rumors that Lockheed is showing interest," one trader wrote in an Email.
BAE shares were up by 2.8 percent at 320.80 pence in early afternoon trade, second-top riser on a 0.5 percent higher FTSE 100 index .FTSE.
Traded volume in the stock was 40 percent of its 90-day daily average, against 33 percent for the FTSE 100.
In October, merger talks between BAE and European aerospace group EADS EAD.PA collapsed.
(Reporting by Sudip Kar-Gupta; editing by Simon Jessop)