Shares in Eircom strengthened yesterday as the market tried to make sense of mixed messages about Swisscom emanating from the Swiss government.

The shares drew particular support from a London report that Eircom could have attracted "predatory interest from the US following last week's forced withdrawal of Swisscom". Sources close to Eircom played down the report last night, but the company itself made no comment.

Shares in Eircom gained five cent to close at €2.00.

Swisscom, which is 66 per cent owned by the Swiss government, said yesterday that its board had held "intense discussions" in the wake of last week's developments. On Friday, the Swiss government said it had instructed its representative on Swisscom's board to block any foreign acquisitions at the firm.

Swisscom said yesterday that it had since "analysed the situation in detail", as well as instigating talks with the federal government. "Swisscom can be expected to inform the general public next week, at the earliest, what action it intends to take," the company concluded. Some in the market took this as a signal that a deal with Eircom is still a remote possibility. It is now certain, however, that Swisscom has lost out on its other current acquisition target, TDC of Denmark.

It emerged yesterday that a private equity consortium, Nordic Telephone Company, had launched the largest leveraged buyout deal in Europe with a long-expected DKr76 billion (€10.2 billion) agreed cash bid for the Danish telecoms group.

"There's an almost 100 per cent probability that this bid will succeed," said Thorleif Krarup, TDC board chairman. Kurt Björklund, of Permira Advisers, one of the five equity funds behind the bid, said there was "a very high degree of certainty".

Swisscom, which has publicly declared its interest in Eircom and has completed due diligence on the firm, issued yesterday's statement amid reports in Switzerland that the government's decision had only been taken after robust debate in cabinet.

The Swiss communications minister, Moritz Leuenberger, said the definition of a foreign acquisition needed to be clarified. On the other side of the debate, the country's justice minister, Christoph Blocher, has raised fears that Swisscom could become like Swissair, which collapsed after a number of ill-judged foreign acquisitions. - (Additional reporting Financial Times service)