Water could become the target of a £1.7bn takeover bid.
Shares in Northumbrian and rivals United Utilities, Severn Trent and Pennon rose on speculation that Canadian pension fund Ontario Teachers Pension Plan, which owns about 27 per cent of Northumbrian, could make a bid.
Analysts said Ontario was thought to be trying to raise debt to fund a bid and to have approached funds such as
Borealis about becoming partners in a deal. Northumbrian declined to comment.
Analysts said a bid for Northumbrian was likely to cause a higher trading range for rival stocks.
Charles Stanley analyst Tina Cook said: “The sector is likely to respond positively to any confirmation of renewed M&A activity.”
Northumbrian provides water and sewerage services in north-east England and water in the south-east. Shares in Northumbrian rose more 30p or more than 11 per cent to 289p while United added 15p to 551.5p, Pennon lifted 25.5p to 540p and Severn Trent gained 45p to 1,170p.