Firms are under pressure to produce steel as cheaply as possible

Tata Steel, part of the Tata industrial conglomerate, said it was "evaluating various opportunities including Corus".

Indian newspapers have suggested that Tata Steel could mount a bid in excess of $10bn for Corus, which would be the industry's second-largest deal ever.

News of the bid interest sent shares in Corus up by more than 15% to 471 pence in morning trade.

'Global opportunities'

Mittal Steel bought Arcelor for $34bn (�18.5bn) earlier this year, prompting talk of a wave of consolidation across the sector as European firms seek to fend off growing competition from China.

Given recent industry consolidation, Tata Steel is reviewing a number of global opportunities Tata Steel See Corus shares

Established in 1907, Tata Steel is India's largest private steel producer with operations in a range of countries including Thailand, Sri Lanka and Australia.

It is also planning to build steel plants in Bangladesh and Iran.

"Given recent industry consolidation, Tata Steel is reviewing a number of global opportunities," Tata Steel said in a statement.

But it warned that there was "no certainty" that a bid would be forthcoming.

Corus has yet to comment on Tata Steel's interest in its business.

Corus - which was formed in October 1999 through the merger of British Steel and Dutch firm Koninklijke Hoogovens - has been the subject of bid speculation for several months.

Reports in March linked the firm with a potential merger with Russian steelmaker Evraz.