Sept. 19 (Bloomberg) -- Tenaris SA advanced to a two-month high in Milan trading on speculation that ArcelorMittal, the world's biggest steelmaker, is planning a bid worth 25.9 billion euros ($36.2 billion) for the pipe manufacturer.

``Tenaris shares are up on speculation of a 22-euro-a-share bid from ArcelorMittal,'' Martin Slaney, head of spread betting at GFT Global Markets in London, said in a phone interview. ``It would certainly make strategic sense for ArcelorMittal and the market does appear to be lending the rumor some credence.''

Tenaris shares rose as much as 1.1 euros, or 6.4 percent, to 18.30 euros and traded at 18.25 euros at 3:45 p.m. local time, valuing the world's largest maker of seamless oil and gas pipes at 21.5 billion euros. The stock has rallied 15 percent since Sept. 10.

Jean Lasar, a spokesman for ArcelorMittal, declined to comment on the report. Tenaris declined to comment, citing company policy not to discuss market speculation. Both companies are based in Luxembourg.

ArcelorMittal shares rose 1.90 euros, or 3.9 percent, to 51.20 euros in Amsterdam, valuing the company at 72.7 billion euros.

Mittal Steel Co. agreed to buy Arcelor last year in a $38.3 billion transaction, a record for the industry, spurring a wave of acquisitions as steelmakers seek to cut costs and squeeze lower prices from raw material suppliers.

More Steel

ArcelorMittal said last week that it planned to increase shipments by more than 20 percent by 2012 to meet demand. It made three times more steel than closest rival Nippon Steel Corp. last year, according to figures from the International Iron and Steel Institute.

Tenaris has spent almost $5 billion in the past year acquiring Chesterfield, Missouri-based Maverick Tube Corp. and Houston-based Hydril to expand in North America, where 40 percent of oil and gas tubes are used.

Tenaris said in August that second-quarter profit rose 7.8 percent to $534.5 million as demand increased for oil and gas pipes used in deep-sea drilling.

Meeting global demand for oil and gas will require an investment of $6 trillion by 2030 to repair and replace pipes, valves and refineries, according to the Paris-based International Energy Agency.

To contact the reporters on this story: Mark Herlihy in London at Mherlihy1@bloomberg.net; Anthony DiPaola in Rome at adipaola@bloomberg.net

Last Updated: September 19, 2007 09:59 EDT