Speculation over a possible bid to takeover Danone has been reignited, helping to drive the French group's share price back up once more.

Danone's share price dived yesterday on news that AMF, the French stock market regulator, said that PepsiCo had indicated to it that it would not be making a bid for Danone.

However, a report by the Financial Times said PepsiCo Inc has not directly discussed Groupe Danone with the AMF, France's stock market regulator.

According the FT website, the soft drink giant has said that it has only confirmed that it was in compliance with all rules governing mergers and acquisitions.

When the FT contacted the AMF, it said that Danone hadn't been directly mentioned by PepsiCo, however, the US company's statement amounted to a confirmation that it wasn't preparing a bid.

As traders this morning questioned whether PepsiCo had actually renounced a bid on Danone or not, the French group's share price rose 2.9% by 1005 GMT.

Meanwhile, the French newspaper La Tribune today reported that Danone was looking to bolster itself against any future foreign takeover by placing up to 20% of its share capital with friendly shareholders.

La Tribune believes Danone wants bank Credit Agricole as one of these investors.