Shares in Lenovo Group, China's largest computer maker, were suspended today amid growing speculation that the Beijing-based company is poised to buy IBM's personal computer manufacturing business

A spokeswoman for Lenovo declined to comment on the speculation after its shares were suspended on Hong Kong's Hang Seng Index pending "a price-sensitive announcement."

IBM has also declined to comment on what it has described as "market rumour".

"We have nothing to say about this story at all," Brian Doyle of IBM said. "We neither confirm nor deny such rumours."

But sources on Wall Street confirmed that IBM was looking to sell its PC business, which includes its desktop computers and laptop divisions, for between $1 billion and $2 billion. (£526 million to £1.05 billion)

Analysts said a Lenovo/IBM PC deal could involve the issue of new shares by Lenovo, which has about $400 million (£210 million) in cash and a market value of $2.57 billion. (£1.35 billion)

Lenovo's share price has fallen 20 per cent this year after intense competition in the price-sensitive Chinese domestic market has kept profits low and revenue growth slow.

If a deal with IBM goes through it would mark a breakthrough in Lenovo's efforts to build its business overseas. It would also make the company part of a small but growing group of Chinese manufacturers buying overseas brands.

Last year, TCL International Holdings bought the television arm of France's Thomson to create the world's largest TV manufacturer.

Shanghai Auto is buying 48.9 percent of South Korea's Ssangyong Motor Company for about $500 million and is in talks with Britain's MG Rover towards setting up a venture.

IBM wants to move away from the low-margin PC business in order to concentrate on the more lucrative areas of consulting services, financial services and manufacturing big computer servers.

As part of this strategy the company today announced it had signed a 7-year, £500 million contract with Lloyds TSB to supply it with Internet telephony and data services.

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