SHARES in brewer Scottish and Newcastle (S&N) began to recover yesterday after falling on the back of rival group SAB Miller quashing speculation of a possible takeover.

S&N, which makes the iconic Newcastle Brown Ale on Tyneside, saw its share price drop to 580p after SAB Miller dismissed talk of a potential £6.5bn takeover as "old rumours", and said the Western European beer market was "unattractive" to the US brewer.

Edinburgh-based S&N, which also makes the Foster's and John Smith's brands, had seen its shares rise to a high of 613.08p, soaring by ten per cent over the past three weeks, fuelled by the takeover talk.

However, yesterday, the company's shares began a resurgence from the day's opening rate of 585p to a high of 593p. It closed at 588p.

S&N, which employs 160 of its 4,500 UK staff in the North-East and brews brown ale at the Federation Brewery, in Dunston, Gateshead, has maintained it will not comment on takeover speculation.

But Malcolm Wyman, chief financial officer of SAB Miller - which makes the Miller, Pilsner and Peroni beer brands - dismissed the talk as purely rumours.

"We've made no secret of the fact that we find the western European beer market to be singularly unattractive," he said.

"There is a lot of speculation in the marketplace and it does seem they are old rumours bubbling up and resurfacing again."