(Adds shares, detail, background)
STOCKHOLM, Feb 7 (Reuters) - Shares in Ericsson and Nokia rose sharply on Friday, a day after a U.S. official suggested the United States should consider buying stakes in the telecom equipment makers to counter China-based Huawei's dominance in 5G wireless technology.
U.S. Attorney General William Barr said in a speech on Thursday that the United States and its allies should consider the highly unusual step of taking a "controlling stake" in one or both of the Nordic rivals to Huawei.
While the two Nordic companies declined to comment on Barr's remarks, Ericsson's largest owner by capital and third largest by votes, activist investor Cevian, said it was "completely natural" the Swedish company would be of interest to the United States.
"A U.S. interest in Ericsson is clearly positive for Sweden, the company and the shareholders," Cevian Capital managing partner Christer Gardell told Reuters in emailed comments.
"A potential deal would have to be based on a completely different valuation level than today's ridiculous share price for Ericsson," Gardell added.
"The board and management need to drive and handle this question with the highest priority."
Investment firm Investor AB, the biggest owner by voting rights in Ericsson, declined to comment, as did the second biggest owner by votes, Industrivarden
Ericsson shares rose 4.4% by 0857 GMT, Nokia was up 3.7%. (Reporting by Johannes Hellstrom; additional reporting by Anna Ringstrom; writing by Niklas Pollard; editing by David Evans)