SHARES in SAP, the German software group, rose almost 4 per cent after a US court approved Oracle’s PeopleSoft takeover and triggered fresh speculation that Microsoft would launch a bid.

A US federal court judge ruled on Thursday that Oracle’s $7.7 billion (£4.3 billion) hostile bid for PeopleSoft, its smaller rival, would not significantly reduce competition. The 164-page ruling by Chief Judge Vaughn Walker, following a month-long hearing , was described by observers as a stinging and rare defeat for anti-trust regulators.

Analysts last night welcomed the ruling, suggesting that it would encourage another round of consolidation among larger software makers. Microsoft admitted in June that it came close to a $30 billion offer for SAP, Europe’s biggest software company, before dropping its plan in fear of regulatory objections.

The two companies have since signed a cross-licensing agreement. Traders, however, said yesterday that the Oracle judgment meant that a Microsoft bid for SAP could be back on the cards.Meanwhile, a spokeswoman for the EU competition regulator said that its investigation into the Oracle-PeopleSoft merger remained on hold. She said it was still waiting for the requested information before it could restart its investigation.

When Oracle first bid for PeopleSoft in June last year, the EU argued that the merger would leave SAP as the only competitor in some business software markets.

It is rare for the EU to overrule a merger that has been approved by US authorities.

Jeffrey Henley, Oracle’s chairman, immediately wrote to PeopleSoft’s board urging PeopleSoft’s board to recommend his $21 a share offer.

Mr Henley said: “The ruling in Oracle’s favour addressed the primary reason you have cited in recommending against our offer. We urge the board to reconsider. We believe our offer provides fair value and that further delay is not in the best interests of PeopleSoft’s stockholders, customers and employees.”

Craig Conway, PeopleSoft’s chief executive, admitted that the ruling was “disconcerting”.

He said: “However, antitrust concerns were only one of many issues.”

The US Justice Department, which brought the anti-trust case, said it was considering whether to appeal.

Oracle’s offer is due to close on September 24.