(Adds detail, Vattenfall, analyst comment)
STOCKHOLM/LONDON, July 15 (Reuters) - Shares in Scottish & Southern Energy (SSE) (SSE.L) rose as much as 2.2 percent on Tuesday as traders cited market speculation that Swedish state-owned utility group Vattenfall AB [VATN.UL] was mulling a bid.
SSE and Vattenfall, which has said it wants to expand into Britain, both declined comment on the market talk.
“We are just hearing a rumour of a 16.5 pound (per share) bid coming from Vattenfall,” a trader said.
Another trader said there was market talk that Vattenfall had secured funding for an offer.
Vattenfall spokeswoman Maria Parent said that while she would not comment on the rumours, Vattenfall has said in the past it wants to expand into Britain.
“There’s a lot happening in quite a few markets, and Britain is one of the markets that are not so consolidated yet,” she said, adding that Poland and other Eastern European markets were also of interest.
Chief Executive Lars Josefsson told Reuters last month that Vattenfall wanted to push into Britain, both through building of plants and through acquisitions. He also expressed interest in Poland and Finland.
“We are generally interested in Britain, and our interest has not diminished,” he said at a Reuters Energy Summit.
“We see ample possibilities for new build, and we also see a few acquisition possibilities ... We have an open mind.”
Last weekend Swedish business daily Dagens Industri cited chairman Lars Westerberg as saying mergers and acquisitions were key for Vattenfall in a consolidating sector.
One analyst who declined to be identified said he believed SSE was the most logical target for Vattenfall.
More than 2.2 million SSE shares had changed hands by 0939 GMT, compared with a full-day average of 3.35 million in the past 30 days. The SSE shares were up 0.7 percent, while the blue chip FTSE 100 .FTSE was down 1.2 percent.
Vattenfall is the owner of Germany’s fourth-largest utility. (Reporting by Anna Ringstrom in Stockholm and Sitaraman Shankar and Dominic Lau in London, editing by Will Waterman)