The likelihood of ScottishPower changing from Spanish to French ownership increased yesterday after the French government told its counterparts in Madrid that EDF Energy is interested in its power market.

President Nicolas Sarkozy's spokesman said: "I can confirm that the Spanish government has been informed of EDF's interested in principle." But he would not comment on whether EDF had its eye on ScottishPower owner Iberdrola.

The spokesman added that the French state, which owns more than 80% of EDF, had told the group that any investment in Spain would have to be done with the agreement of its government. On Wednesday, the Spanish administration denied there had been any contact.

Iberdrola's purchase of ScottishPower was only completed in April this year, but EDF has long been open about its ambitions to enter the Spanish market and there has been speculation that it is planning a joint bid with construction firm ACS, which owns 7% of Iberdrola's stock and a further 5% in options.

If a takeover were to occur it is thought that EDF, which is already the largest electricity supplier for London, the southeast and the south-west of England, would take on ScottishPower and some Spanish assets. ACS would get Iberdrola's renewable energy arm.

Iberdrola chairman Ignacio Sanchez Galan has made it clear he is strongly opposed to a break-up of his company and may seek another company to rescue it and keep it together.

Iberdrola's share price has plummeted during the recent market turmoil, making it more attractive to potential bidders. But yesterday's news sent it up 6.49% to 10.18 (75p).

Any takeover could be long and complicated. Spain has a history of protecting its power market against foreign invaders, and in 2000 it created regulatory legislation nicknamed the "anti-EDF law", which blocks foreign firms from owning more than 3% of a Spanish power utility without government approval.