Collins Stewart could soon find itself under foreign ownership after the UK stockbroker revealed it had received a preliminary approach.

It would not identify the potential buyer and warned that talks were “at a very early stage”, but people close to broker said the interested party was a non-UK company looking to get into the European and UK markets.

There was speculation that Macquarie, the Australian financial services group, was the “third party”, but Nomura, the Japanese investment bank, and Religare, an Indian brokerage were other logical candidates.

The approach suggested that bargain-hunters think valuations for UK stockbrokers are unlikely to fall further.

Like many of its peers, Collins Stewart has seen its shares fall some 60 per cent over the past 12 months after the downturn in corporate activity in the Square Mile.

The group, headed by Joel Plasco, has been particularly badly hit because its capital markets division, which raises funds for Aim-listed companies, is its most profitable arm. It has handled only one Aim IPO this year.

News of an approach prompted a 31 per cent share price rally to 100p. The stock was trading on about 7 times 2008 earnings, against the 11.5 times following its 2006 demerger from Tullett Prebon, the inter-dealer broker. The Collins Stewart approach came a week after Tullett Prebon said it was in talks to combine with GFI, a US rival.

Jeremy Grimes, analyst at Arden Partners, said: “Collins Stewart has been too cheap for too long, making approaches both rational and inevitable.”

Analysts have long said the sector was ripe for consolidation and Wednesday’s approach is the latest sign of foreign interest in UK brokers in the City.

But for any approach to succeed, industry watchers say, it would need the blessing of Terry Smith, the company’s chairman, who, it is thought, would be unlikely to allow an opportunistic approach to succeed.

Market talk was that the approach could be about 110p, a 42 per cent premium to Tuesday’s closing price. However, one analyst believed a buyer might need to pay well above 130p.

Macquarie and Nomura declined to comment. Religare could not be reached for comment.

Additional reporting by Peter Thal Larsen