NEW YORK (Reuters) ? Marsh & McLennan Cos. Inc.?s shares rose as much as four percent yesterday after the Sunday Times of London said that Willis Group Holdings made a bid for Marsh two months ago.

Marsh?s shares closed up $1.06 to $28.40 in early afternoon trading on the New York Stock Exchange, after trading as high as $28.43. Willis shares were up 0.9 percent or 33 cents to $38.74.

In the options market, prices also rose and options volume at noon was roughly twice its average for the day after the Times report, traders said.

Representatives for both Willis, the third largest insurance broker, and Marsh declined to comment.

The Times said Willis made an ?informal approach? two months ago, but Marsh rebuffed it. Private equity firm Kohlberg Kravis Roberts & Co. would have provided financing, the report said.

The deal would have created an insurance broker with a market value of more than $21 billion and a 40 percent market share, analysts said.

KKR would have had a substantial stake in the combined group, The Times said. KKR declined to comment.

In 1998, KKR took Willis, then listed in London, private in a $1.6 billion deal. It then relisted Willis on the New York Stock Exchange in 2001 for $1.9 billion.