Nokia (NOK) shares rose over 2 percent on Monday after a newspaper report that Cisco Systems Inc. (CSCO) is mulling a bid for the top mobile phone maker to get hold of its wireless infrastructure technology.

Nokia's shares were up 2.26 percent at $16.30 Monday on the New York Stock Exchange (search).

The Business newspaper reported on Sunday, without identifying its sources, that Cisco's Chief Executive John Chambers was believed to be interested in merging with a wireless infrastructure company.

It said Cisco had identified Finland's Nokia as the most likely target, although the U.S.-based firm has previously focused on acquisitions of niche technology players.

Cisco declined to comment on the London newspaper report. Nokia spokeswoman Arja Suominen said the article seemed to be "pure fabrication based on rumors on the Internet."

Nokia has previously said it did not plan to sell the networks division, which it considers part of its core business. The unit is the world's second-largest mobile infrastructure maker after Sweden's Ericsson (ERICY).

Marko Alaraatikka, a fund manager with Finnish-based Evli, said it would make sense for Cisco to acquire Nokia's networks operations, which has annual sales of 6.4 billion euros ($8.07 billion), and made up 22 percent of Nokia's turnover in 2004.

"Buying (Nokia's) networks division would be good for Cisco ... if they want to diversify into wireless networking," said Alaraatikka, who helps manage 3.5 billion euros in assets.

"But for Nokia, I think they would ask a pretty high price for it," said Alaraatikka, whose funds hold Nokia stock.

Cisco, the largest maker of Internet equipment, is worth about $123 billion, while Nokia's market value is around $71 billion.

Credit default swaps on Nokia were unmoved by the report, with five-year default swaps indicated at 21.5 basis points, which means it costs 21,500 euros a year to insure 10 million euros of debt against default.

The Business said Cisco's mainstay networking market was changing fast with the convergence of fixed-line and wireless networks, and the company needed technology for intelligent wireless applications, which Finnish-based Nokia could provide.

Several analysts were skeptical about the report.

"I have seen similar rumors twice before," said eQ Bank analyst Jari Honko.

Nordea analyst Karri Rinta was also dubious.

"Cisco is already doing growing business with mobile operators with the products and services they have in their portfolio, so (there's) no pressing need to acquire new products to get into this business," said Rinta, who has a short-term "sell" recommendation on Nokia shares.

Selling its mobile infrastructure business would make it tough for Nokia to maintain its strong position in handsets, and put it at a disadvantage in developing technology for third generation networks, he added.

Nokia and Cisco launched a cooperation deal in June under which mobile phones made by Nokia's enterprise unit will connect to Cisco's IP-based corporate telephone switches.

Cisco is due to report its fourth-quarter and full business-year figures on Tuesday.