Shares in Marconi were up 13.5 per cent in late afternoon trade after the troubled telecoms equipment maker responded to press speculation by confirming that it was in prelimary talks over a possible takeover.

“The discussions are at a preliminary stage and there can be no assurance that an offer will ultimately take place,” said Marconi in a statement to the stock exchange.

By late afternoon the shares were up 36p at 303p.

Marconi did not name any of the third parties it is in discussions with, but its Chinese partner, Huawei, is understood to have held exploratory talks with the UK company

Marconi, in effect, put itself up for sale in May after losing out on a £10bn contract to build a new network for BT, by far its single biggest customer. The company has made it clear its preference was to either find joint venture partners or a buyer.

Huawei, one of eight companies selected by BT on the £10bn network contract, already has an agreement with Marconi to distribute each other's products.

Last week, Mike Parton, Marconi chief executive, reiterated that it would explore all options. "We remain committed to maximising shareholder value and positioning the business for a successful long-term future," he said, as the company unveiled widening first quarter losses and a decline in gross margins.

Few analysts believe Marconi can continue as an independent telecoms equipment supplier as it lacks the global scale to be competitive. People close to the talks indicated that Huawei was one of a number of industry operators Marconi has approached in recent months.

Morgan Stanley, the US investment bank, has been advising the company on its strategic options while Huawei is understood to have appointed UBS as advisers.

A merger with its Chinese partner would come as little surprise to analysts, who have identified Huawei as the best fit for Marconi, although it remains unclear if any would-be bidder is interested in the group.

Richard Windsor, telecoms analyst at Nomura, said last week: "I think that Marconi is up for sale - it is just finding a buyer that's the problem."

One potential stumbling block to a bid for Marconi could be its pension deficit.

Although Huawei could agree to fill the shortfall in the pension scheme as liabilities fall due, the Pensions Regulator has expressed concern about the ability of UK scheme members to force overseas parent companies to pay their debts in full. If Huawei is the successful bidder for Marconi, UK scheme members may have to seek relief in Chinese courts.