UPDATE 1-M&S up on bid talk, Green says hasn't bought shares

(Adds Green, analyst comments, background, updates shares)

By Mark Potter

LONDON, July 8 (Reuters) - Marks and Spencer (MKS.L: Quote, Profile, Research) shares bounced from a 7-1/2 year low on Tuesday on speculation the British retailer might become a bid target, although billionaire Philip Green denied market talk he was buying a stake.

"I haven't bought any shares, and I don't own any shares in any retailer," Green, the owner of department store chain Bhs and fashion group Arcadia, told Reuters.

Green abandoned plans for a 9.1 billion pound ($17.9 billion), or 400 pence a share, bid for Marks and Spencer (M&S) in 2004 after failing to win over the board and enough of the group's shareholders.

Shares in M&S, Britain's biggest clothing retailer, hit a low of 210-1/4 pence on Tuesday, following a profit warning last week, before bouncing to 231-1/2 pence on bid speculation.

"I think M&S is a very interesting acquisition target," said Bernstein analyst Luca Solca.

"There's fundamental value in M&S. The brand is very strong and the stores are certainly better than they were before (Chairman Stuart Rose took the helm in 2004)," he said.

Solca said M&S's extensive property assets could appeal to private equity firms and also thought a tie-up with supermarket chain J Sainsbury (SBRY.L: Quote, Profile, Research), considered by Rose in the past, would make sense.