Shares in Burberry rose as much as 8% today after reports that Italy's Moncler was considering a bid for the London-listed luxury groupto create an outdoor clothing specialist giant.
Moncler, known for its puffer jackets, said it would not comment on "unsubstantiated rumours" of a possible deal between the two luxury brands.
Its shares were down 0.35% this morning, slightly underperforming the sector.
Burberry, which had a market valuation of nearly £3 billion as of the last close, told Reuters it does not comment on speculation.
The company's shares were up 4.5% by 9.30am. The stock has plummeted about 40% so far this year.
Italian broker Intermonte said a possible deal between the two luxury groups is an "unlikely scenario", as Moncler would see the relaunch of such a large company as Burberry as risky.
"Given the ongoing work in progress for the acquisition of Stone Island by Moncler from 2020, which so far has somewhat disappointed the market, the timing might be surprising," UBS analysts said.
Burberry, known for its classic camel, red, and black check prints, has lagged behind its peers as it struggles to revive demand for its clothing.
The British luxury group, which scrapped its dividend and issued a profit warning in July, will report its first half results on November 14.
Broadly, luxury groups have struggled with tighter consumer spending in recent quarters, especially in China, with Moncler reporting a 3% drop in third-quarter sales last month.
Miss Tweed, a specialist fashion and luxury news website, reported "growing industry chatter" that Moncler could consider a bid for Burberry.
It added that LVMH's chief executive and controlling shareholder Bernard Arnault, whose luxury conglomerate recently invested in Moncler, is keen to see such a deal happen.
