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EADS weighs legal action over market rumours

PARIS, Oct 9 (Reuters) - EADS is considering taking legal action after a series of media reports about the progress of negotiations with BAE Systems affected its share price, a source familiar with EADS thinking said on Tuesday.

"EADS is seriously contemplating filing a complaint for stock market manipulation following the observation of multiple leaks and false rumours," the source said.

An EADS spokesman was not immediately available for comment.

On both Friday and Tuesday, the aerospace group denied media reports that the talks had collapsed. Both the reports and denials caused movements in its shares.

On Tuesday, EADS shares closed down 0.6 percent after rising sharply on the latest report of talks failing.

Several investors have criticised the merger proposal, leading to falls in EADS shares when details of the talks were leaked and gains when the talks seemed to encounter problems. EADS and BAE have said they are unable to give investors full details of the plan yet for regulatory reasons.

EADS is listed in Paris where the legal system allows plaintiffs to launch lawsuits against unknown persons before the defendants can be identified, prompting an investigation.

The practice is not uncommon in major French corporate sagas and is often seen as a sign of heightened tensions or speculation.

(Reporting by Tim Hepher; editing by Jane Barrett)

((tim.hepher@thomsonreuters.com)(+33 1 49 49 54 52)(Reuters Messaging: tim.hepher.thomsonreuters@reuters.net))

Keywords: EADS BAE/RUMOURS