Any deal could run into competition problems

Shares rose to 578 pence at close, valuing the firm at �11bn ($19.5bn).

The company has reportedly begun talks over a possible takeover bid by German utility firm E.ON, while Scottish and Southern Energy may also be interested.

E.ON already owns electricity and gas supplier Powergen and buying Scottish Power would give the firm nearly 16 million UK customers.

Other reports have said that Scottish and Southern Energy (SSE) - which supplies energy to 6.1 million customers - had appointed Credit Suisse to advise it on a possible move for Scottish Power.

Both Scottish Power and SSE declined to comment on the reports.

However, analysts suggested that Scottish Power might be looking at a deal that would value the company at between 600p and 650p.

Competition questions

In September, E.ON issued a statement saying that it was considering a move for Scottish Power, although it added that no approach had been made.

Scottish Power supplies energy to 5.2 million users in the UK.

It has been eyed as a possible takeover target since May this year when it announced the $5.1bn sale of its US Pacificorp business to MidAmerican, a deal which has yet to be cleared by regulators.

However, given the large number of UK customers a combined Powergen-Scottish Power business would have, a takeover bid by E.ON would almost certainly require approval by competition authorities.

A merger between Scottish Power and SSE is also likely to attract the attention of competition authorities, as the two firms supply 70% of electricity and gas customers in Scotland.

The Reuters news agency says that sources have told it that SSE is unlikely to get into a bidding war with E.ON, one of the largest power companies in Europe, but might be interested in a deal if other plans fall through.

Both E.ON and Scottish Power report their results on Thursday.