Northern Rock shares see-sawed Friday after a paper reported that it refused help from JPMorgan and as bargain-hunters stepped in to grab the stock in the hope of future gains.
The British bank turned down an offer of 500 million pounds ($1 billion) in funding from U.S. investment bank JPMorgan that could have eased its liquidity problems, the Daily Telegraph said.
The loan would have been part of a wider funding solution proposed by the U.S. bank, a source close to Northern Rock told the paper.
Investors looking to pick up a bargain at a time when the bank's future is impossible to predict have contributed to the volatility of Northern Rock's shares in the wake of a 71% freefall since last week, Reuters reported.
"Trying to put a value on it is impossible, which is why we're seeing such volatility," a dealer told Reuters.
One investor buying into Northern Rock's depleted stock was hedge fund RAB Special Situations, said Reuters, which has bought a stake of 6% this week.
On Thursday, 141 million Northern Rock shares changed hands compared with an average daily turnover of 9 million last week before the mortgage lender asked the Bank of England for emergency funds, David Buik, from BGC Partners, told CNBC.com.
Volatility is likely to continue, with investors wary about the bank's future.
"As time goes on it's less likely the bank gets sold as a whole and more likely it goes into a wind up situation," Carine Cunningham, head of financial analysis at Royal Bank of Scotland, told CNBC.com.
"The Bank of England support should mean this can happen in an orderly fashion, but critical to all of this is the price achieved for assets sold," Cunningham added.