French Budget Minister and government spokesman Jean-Francois Cope said on Wednesday that the government is "closely" following Danone takeover bid and that it is no need yet for the government to intervene.

Cope told reporters that the government is "closely" following events and that the reports of an imminent offer for Danone by Pepsico Inc were "nothing but rumours."

"There is no need to take any decision of any sort for the moment... "these types of rumours come up everyday on the financial markets," he said, while praising Danone as a 'jewel' of French industry both in terms of its status as a large employer and as a leading agricultural player.

French Prime Minister Dominique de Villepin said after the cabinet meeting "We plan to defend France's interests,", insisting he was "not commenting on any rumors."

Earlier in the day French Employment Minister Jean-Louis Borloo told French private radio Europe 1 that the French government will "do all" to prevent Groupe Danone SA from a hostile takeover bid by its American rival PepsiCo.

Danone shares rose sharply in opening trade Wednesday after an overnight report in the Financial Times newspaper claimed PepsiCo has appointed banks to advise it on a bid.

Danone and PepsiCo both declined to comment on the prospects for a bid. PepsiCo, UBS and Morgan Stanley also refused to discuss the report that the maker of Pepsi-Cola, Fritos chips and Tropicana juices has hired the two investment banks to prepare a possible offer.

All French papers reflected on Wednesday concerns among the French public about the rumoured Danone takeover bid.

Centre-right newspaper Le Figaro said that the threat to Danone "revives a bad memory, the disappearance of the body and soul of Pechiney, the jewel of the French aluminium industry", a reference to the acquisition in 2003 of Pechiney by Canadian group Alcan.

Financial paper Les Echos said that recollections of the deal are unlikely "to calm the apprehensions in France about the future of Danone" and that French antagonism arose from anxiety about employment policy and possible changes to French consumer habits.

Source: Xinhua