At one point, M&S shares were trading at 317p, up 20 per cent on the previous day's close. Brokers said institutional investors were shunning the shares, which were being mopped up by "high net worth individuals".
Almost one hundred million shares change hands yesterday - 3.6 per cent of the company. The shares closed up 37.25p at 300.75p. A rumour that Tesco, which competes with Marks & Spencer in food retailing, would launch a 380p all-share bid on Monday kick-started the day's dealings.
Later, a change in the sterling exchange rate with the Swedish krona ignited speculation that Hennes & Mauritz, the Swedish womenswear group, was filling its coffers to make a cash bid. H&M shares touched a year high.
The usual suspects - Kingfisher, the Woolworths and B&Q group, and Knutsford, the takeover vehicle headed by the former Asda chairman Archie Norman - were also tipped as predators. There was also talk of an American bid.
Despite continued reports of weak trading and the continuing search for a chairman at M&S, retail investors have shown no signs of getting bored of the stock.
Marks & Spencer moved to quash speculation that it was in talks over an agreed deal. "The Board of Marks & Spencer notes the recent movement in the company's share price and confirms that it knows of no reason for this movement," it said.
None of the rumoured bidders were prepared to comment. Terry Leahy, Tesco's chief executive, was in Hungary yesterday on a routine visit to store staff. Analysts said the City would not support a bid by Tesco, which is seen as having a credible strategy based on expansion overseas and on the Internet. Tesco shares traded lower most of the day, but closed up 3p at 185.5p.
Archie Norman declined to rule out making a bid. "As far as my personal position is concerned, I have not been approached [to chair M&S]. As far as Knutsford is concerned, we are committed to acquiring businesses in the retail, leisure and property sectors. I have an agreement with Asda to be an adviser and I wouldn't do anything to embarrass the company."
Carl Henric Enhorning, financial controller at H&M, said: "Our strategy is to acquire good locations, but if you look at our history you'll see we rent and do not own. M&S owns its sites." Analysts said H&M would bring supply-chain management expertise, which M&S lacks, and could enter sale and leaseback agreements on its property.
A source close to the Knutsford team said: "They've always said it will take some time to find the right deal, but the enthusiasm for Knutsford's offering means they might be able to take on something a little bigger than planned."
The bid frenzy came the day after Peter Salsbury, Marks & Spencer's chief executive, hosted a lunch for institutional investors. The atmosphere was said to have been downbeat. Mr Salsbury, who is still looking for a chairman for the group to succeed Sir Richard Greenbury, has been meeting investors one-on-one over the last month.
Marks & Spencer is thought be experiencing particularly weak Christmas season trading. Like-for-like sale of textiles last week are thought to be down by 10 per cent year-on-year, with lingerie sales down by 20 per cent. However, the group is thought to be unlikely to embark on a campaign of heavy discounting, having limited its stock buying.
One retail analyst said: "M&S isn't going to agree to a bid. It's got a real sense of history and things haven't been bad enough long enough."
POSSIBLE RUNNERS IN THE ST MICHAEL BIDDING STAKES
Tesco's Terry Leahy is setting his sights on beefing up his non-food portfolio, and a bid for M&S might fit the bill. Tesco and M&S have a history of co-operation on shopping centre developments, and a combination of the two would fit culturally better than other mooted tie-ups. The combined group would also have a stronger balance sheet to help international ambition. But overlaps in food retailing might run foul of the regulators.
Archie Norman has shot back into the limelight as one of the team of leisure, property and retail tycoons behind shell company Knutsford. He wants to do deals but is M&S too big a fish to swallow? There'd be no shortage of City cash to fund the move, but M&S's defence team would have a field day. The case would be based solely on Mr Norman's management ability, with none of the usual synergy and cross-selling talk.
Sir Geoffrey Mulcahy's Kingfisher, which owns B&Q and Woolworths, turned in pounds 7.46bn of sales last year, so no wonder he's seen as the king of the retail sector. Earlier this year he was thwarted by Wal-Mart in his bid for Asda, so he's bound to be on the prowl. But, while it would make a great story, Sir Geoff already has plenty on his plate. There's B&Q's expansion to manage and trading at Woolworths is looking weak.