Speculation over the future of BT intensified after India's richest man was tipped to launch a takeover bid.
Shares in the telecoms giant jumped as much as 10 per cent during the day after India's Economic Times said Mukesh Ambani's Reliance Industries could make an offer.
The report followed weeks of rumours that BT's biggest shareholder is planning to raise his stake in the firm.
Takeover interest? Shares in BT jumped after India's Economic Times said the nation's richest man Mukesh Ambani (pictured) could make an offer
But it was met with a firm denial by Reliance.
A spokesman said: 'We categorically deny any intent to bid for the UK telecoms group BT. The article is completely speculative and baseless.'
Shares fell back slightly but were still buoyed as takeover talk around BT continues. The stock closed up 6.1 per cent, or 9.4p, at 163.4p.
Next month will see the end of an agreed period during which the FTSE 100 firm's biggest shareholder cannot buy any more of the company.
French billionaire Patrick Drahi took a 12.1 per cent stake in BT in June through his company Altice.
At the time, he said he had no plans to make a full takeover offer for the company.
Under City rules, he was barred him from increasing his stake for six months. But with the ban due to lift on December 11, Drahi is thought to be looking to increase his ownership.
Three sources told Reuters he wants to have more influence with BT and believes its fibre-optic rollout will increase its value.
Weakness in BT's share price, which has fallen by 16 per cent since Altice bought its stake and is 67 per cent lower than six years ago, has improved after talk of a bid.
The bumper £9billion takeover offer by American private equity firm KKR for heavily indebted Telecom Italia has sparked speculation of further bids in the sector.
AJ Bell investment director Russ Mould said the Telecom Italia bid suggests the 'whole sector' is in play.
He said: 'You can understand why BT might attract interest. Despite its substantial pension liabilities and debts and iffy track record, it has a near monopoly position in the UK's broadband network.
'And, for all its recent woes, BT has the capacity to generate substantial cash flows.'