Bloomberg reported that Acerinox SA, the world's largest stainless steel producer, rose the most in 11 months after rival ThyssenKrupp AG discussed merging its Inoxum stainless unit with Finland's Outokumpu Oyj.

As per report, Acerinox climbed 4.9% to EUR 10.89, valuing the Madrid based company at EUR 2.71 billion. Options for Inoxum include an initial public offering, spin off or sale.

Mr Manuel Coelho, an analyst at Banco BPI based in Porto, wrote in a note to investors that "This could be a significant step in the long awaited consolidation of the European stainless steel sector, marked by a structural overcapacity. We note however that the combination of Inoxum and Outokumpu should raise antitrust hurdles."

European stainless producers have struggled for years with overcapacity, sliding profit and rising costs while failing to agree on mergers.

Moody's Investors Service said in August 2011 that the companies had been unable to value their assets at levels that allowed deals to go ahead. Combinations may also be opposed by European Union antitrust authorities.

(Sourced from www.bloomberg.net)