Shares in Nokia rose as much as 17 percent in heavy volumes earlier on Wednesday on market talk that Lenovo may be interested, but gave up the gains after executive Gianfranco Lanci's rebuttal.

"This must be a joke," Lanci, who runs Lenovo's operations in Europe, Middle East and Africa, told Reuters. "There's nothing ongoing."

Nokia has been trying to reverse its decline in the smartphone market by adopting Microsoft software, but has had little success against rivals Apple and Samsung .

Its shares have dropped more than 70 percent since it unveiled the strategy shift in February 2011 and speculation about a possible takeover bid for Nokia has been rife.

Nokia shares were 1.3 percent lower at 1.925 euros by 1253 GMT, valuing the firm at 7.21 billion euros.

"Frankly, I'm quite surprised that people actually bought into the possibility (of a takeover)," said a banker based in Hong Kong, who declined to be identified because he was not authorised to speak to media.

"It (Lenovo) would have been spending so much money buying something that is not really Lenovo's core line of business. I would think a more likely possibility would be some form of collaboration or cooperation between the two," the banker said.

Lenovo has a market capitalisation of $7.1 billion and it has cash and cash equivalents of $3.8 billion.

"Nokia is pretty close to the bottom ... Therefore the optimal window for any acquisition is closing," said Canalys analyst Pete Cunningham, adding he thought it was highly unlikely someone would buy Nokia.

Last month Nokia reported a steep loss for the April-June quarter, but it did not burn through its cash as quickly as analysts had feared, sparking some hopes that the worst might be soon over.

Nokia declined to comment on Wednesday.