British Telecom shares soared to a new high on Thursday after rumours that the firm was about to be taken over by Microsoft or another American purchaser.

Shares rose to a high of 580p in heavy trading before closing at 576p, up 3.4% on Wednesday's closing price. On Friday morning they stood at 581.25, before falling back to 576.75 in the early afternoon.

Analysts were sceptical that Microsoft would want to buy BT. "The benefits for them are quite thin", said Graham Finnie, research director at Yankee Group Europe, "BT's assets are mostly in the UK".

British Telecom failed in its bid last year to enter the US market by purchasing telecoms giant MCI - which was snatched up by American upstart Worldcom. BT did make a $3bn profit on its existing holding in MCI, however, and the $7bn it will receive for its stake makes it a takeover target.

If Bill Gates were interested in purchasing BT he could buy half of it with his own personal fortune. He is the world's richest man, worth around $30bn (£18bn) - BT is worth £37.1bn at current share prices.

Other possible bidders for BT include Bell Atlantic.

Neither British Telecom nor Microsoft would comment on the takeover rumours.
 

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