STOCKS NEWS EUROPE-TIM Brasil speculation lifts Telecom Italia

Shares in Telecom Italia (Other OTC: TIAJF - news) rise as investors continue to bet on a sale of its 67 percent stake in Brazilian mobile network operator TIM Brasil .

"It's still up on Brazil," a Milan-based trader says.

On Friday, a report in the Italian media about a possible joint offer for TIM Brasil by Spain's Telefonica (Madrid: TEF.MC - news) and its two main rivals on the Brazilian mobile market pushed Telecom Italia shares up 7 percent.

Telefonica, the main shareholder in the Telco holding company that controls Telecom Italia, denied any knowledge of such an offer on Monday. TIM Brasil has a market value of $13.7 billion.

"The statement from Telefonica could hardly be seen as a denial of a possible deal," analysts at Mediobanca (MDD: MB.MDD - news) write in a note.

The Italian press reports on Tuesday that a board meeting on Jan. 16 would discuss a proposal to consider any offer for TIM Brasil as an operation among related parties - making the approval process for a potential offer more complex.

"These updates will further raise the speculation over a potential M&A on the Brazilian assets," Mediobanca writes.

Bt 1022 GMT shares in Telecom Italia rise 3.4 percent against a 0.7 percent rise in Italy's blue-chip stock index. Traded volumes are already equal to the daily average of the last month.

Reuters messaging rm://massimo.gaia.thomsonreuters.com@reuters.net