BNP Paribas says will not bid for SocGen

By Yann Le Guernigou and Sudip Kar-Gupta

PARIS (Reuters) - French bank BNP Paribas (BNPP.PA: Quote, Profile, Research) has walked away from a possible bid for rival Societe Generale (SOGN.PA: Quote, Profile, Research), which is fighting to remain independent after suffering the world's biggest rogue trading scandal.

"Given the persistent rumors, BNP Paribas clarifies that it has ceased to consider a potential tie-up with Societe Generale," France's biggest listed bank said on Wednesday.

The news punctured bid rumors that have swirled in the wake of 4.9 billion euros of trading losses that the bank blames on a lone junior trader, Jerome Kerviel.

"If a French bank that knows the market doesn't want it, then it's unlikely that anyone else will," said Ion-Marc Valahu, head of trading at Amas Bank in Switzerland.

SocGen shares fell as much as 8.2 percent, flicking away the speculative froth built into prices since SocGen announced the shock trading loss on January 24. The bank's stock fell at one point to its lowest intraday level since August 2004.

BNP Paribas shares rose sharply as investors expressed relief that it would avoid stretching its resources in the midst of global financial market turmoil, analysts said.

SocGen closed down 7.1 percent at 62.44 euros. The bank has a market capitalization of some 36 billion euros, including the effects of SocGen's recently completed capital increase.

BNP closed up 4.7 percent to 60.76 euros, on another volatile day in a week which has seen Wall Street bank Bear Stearns BSC.N rescued from collapse. BNP has a stock market value of around 55 billion euros.