Prudential plc, the UK's second largest insurer, has been at the center of takeover speculation as investors expect to see some consolidation in the industry this year.

Shares in Prudential were pushed up to their highest in three and a half years by the rumors of a possible bid from either a domestic rival such as market leading UK insurer Aviva, or from French group AXA.

AXA, itself the second largest insurer in Europe, indicated in December that it was looking to make a deal that would increase its size substantially and play a leading role in global consolidation.

Prudential refused to comment on the speculation. Many observers believe the company is a takeover target because of its strong presence in Asia and a profitable business in the US.