Shares in British Gas's owner Centrica have jumped 11% after a report that Russia's Gazprom was about to bid.
Centrica has 17 million customers
The report came from a senior official of the state-owned gas producer, quoted on Russian news agency Interfax.
But in a later update, Gazprom told the agency the official was talking about "any possible energy asset in Britain".
Centrica, which is the UK's largest utility firm with more than 17 million electricity and gas customers, said it had not been approached.
Gazprom is the world's biggest gas producer, and its chairman Alexander Medvedev - a close adviser to President Putin - told the BBC it recently aspired to become one of the world's largest energy companies.
According to a Gazprom spokesman quoted on Interfax, the firm was "studying the possibility of expanding into the British energy market" and "looking at all possible options".
Any takeover or merger involving Centrica would be likely to involve close scrutiny from industry regulator Ofgem and the competition authorities.
"The position is that we have not had any approach from Gazprom," a Centrica spokesman said.
Centrica's shares closed up 11%, or 30 pence, at 300p.