Reuters bid approach sets media stocks aflame

By Ana Nicolaci da Costa and Amanda Cooper

LONDON (Reuters) - A bid approach for Reuters RTR.L propelled shares in the financial information and news provider higher by a record 30 percent on Friday, making the media sector the top performer across Europe.

By 11:09 a.m., shares in Reuters, which said it had received a preliminary takeover offer, had risen 30.2-percent to 641 pence, their highest single-day increase since the company floated its stock in 1984.

The DJStoxx European media index .SXMP was up 3.9 percent, on track for its largest weekly rise since early 2004.

The approach to Reuters comes days after News Corp NWS.N bid $5 billion (2.5 billion pounds) for Dow Jones, an offer that was turned down by Dow Jones's controlling family.

"You had the bid for Dow Jones earlier this week from News Corp and the price was seen by many people as very punchy. People are putting two and two together," said Colin Morton, fund manager at Rensburg Fund Management, who owns Reuters shares.

Earlier Reuters shares rose on market speculation of a 600-pence-a-share bid from Canada's Thomson Corp TOC.TO TOC.N or Rupert Murdoch's News Corp NWSa.N.

"There's a bit of a bid frenzy out there and people are looking at what's going on in this industry and working out what price you would have to pay," said Morton.

Under Reuters ownership structure, a single golden share held by The Reuters Founder Share Co. can block a hostile bid.