TORONTO (Bloomberg) — Canadian stocks rose on takeover speculation, after a newspaper report that buyout firm Kohlberg Kravis Roberts & Co. has been in discussions with BCE Inc. about a bid. Shares pared gains after BCE said it’s in no such talks.A purchase of BCE, the nation’s biggest phone company, with a market value C$25.9 billion, would be the largest takeover ever in Canada. Shares of other companies thought to be potential bid targets, including Ipsco Inc., gained.

Investors “will be running the numbers on other large companies. There’s so much cash washing round,” said Gavin Graham, who helps oversee about $5.1 billion as chief investment officer at Guardian Group of Funds in Toronto. The size of the reported deal means that “with a few exceptions — the banks — most Canadian companies are of a size that someone could take them over.”

The Standard & Poor’s/TSX Composite Index gained for the first time in three days, adding 60.87, or 0.5 percent, to 13,258.02 in Toronto. It fell the past two days on concern that the US economy will slow and that inflation may keep the central bank from cutting interest rates to boost growth.

Shares of BCE, owner of Bell Canada, the country’s biggest fixed-line phone service provider, rose C$1.92, or 6.4 percent, to C$32.05, the most since September 11, 2006.

Kohlberg executives have met with BCE Chief Executive Officer Michael Sabia within the past two weeks, to discuss terms of a friendly takeover bid, the Globe and Mail said, citing people it didn’t name. The New York-based buyout firm has also approached Ontario Teachers’ Pension Plan, BCE’s biggest shareholder, to be a partner in the deal, the newspaper said. Kohlberg and Teachers teamed up on bids for Shoppers Drug Mart Corp. and Yellow Pages Group LP.

There are no “ongoing discussions with any private equity investor” and the company has “no current intention to pursue such discussions,” Montreal-based BCE said in a statement.

Teachers spokeswoman Deborah Allan declined to comment, as did Kohlberg representatives Zoe Watt and David Lilly.