Prudential's chief executive said yesterday that he would welcome new long-term investors, as speculation that a Chinese insurer planned to take a stake in the company sent Pru's shares soaring.

Prudential shares jumped 6 per cent in early trading before closing up 12p, almost 2 per cent, at 630p after reports in China that Ping An Insurance intended to buy a non-controlling stake in Britain's second-largest insurer.

Ping An is raising $22 billion (£11.3 billion) through the sale of bonds and additional shares, which reports have suggested could be used to fund investments in Europe and the United States.

Prudential shares led a FTSE recovery yesterday morning, followed by mining stocks and other insurers, although the market later closed down 130 points. Shares in Aviva, Britain's biggest insurer, also closed up 2 per cent at 598p because of the prospect of Chinese interest.

Speaking on the sidelines of the World Economic Forum in Davos, Mark Tucker, Pru's chief executive, declined to comment specifically on the Ping An reports, but said: “We always welcome long-term shareholders. We talk to a number of different shareholders, talking about any specific one is not appropriate. I don't know what the intention [of Ping An] is.”

Chinese insurers are being encouraged by Beijing to begin negotiations with big Western companies. China Life, the country's largest insurer, which is listed on the stock market but is controlled by the Chinese authorities, is also thought to be looking at European or American insurers. If Prudential struck a deal with a Chinese company, it would gain greater exposure to China, where foreign companies can own take only 25 per cent of a domestic company. Ping An, worth more than £40billion, is 17 per cent owned by HSBC. Last year the Chinese insurer bought a 4.2 per cent stake in Fortis, the Belgian bank.

Shares in Prudential have been under pressure. Fears that the company would be hit by an economic slowdown have tested investors' nerves and last week's turmoil on the FTSE 100 Index left the company down 12 per cent at 596.5p - its lowest level since September 2006.

Prudential already operates in 13 Asian markets, including China and India. Mr Tucker said yesterday that he would look for cheap acquisitions in the region on the back of stock market turbulence that has depressed the value of some companies. “We have the cash, the capital, the risk appetite, and we certainly will continue to watch and see,” he said.

He ruled out a float of the Asian business in 2008. Instead, Mr Tucker said that Pru planned to boost the value of the company by giving shareholders “greater disclosure” on its performance and strategy. “Come back to me in a year's time if those things [the valuation] have not changed,” he said.

Last week Sir David Clementi, the chairman of Prudential, joined Gordon Brown on a visit to China that was intended to foster business links between the countries.

Mr Tucker said that Jackson National, Prudential's business in the United States, was not immune to a downturn in America's economic conditions but added that the company would outperform its competitors in the long term. He hoped that Prudential had silenced calls from shareholders for a break-up of the insurer. “You never say never, but at the present time we have a robust model and the group is performing well,” he said.

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