Shares in TEPCO closed up 20 percent in Tokyo trade Monday after Chief Cabinet Secretary Yukio Edano said he was unaware of alleged meetings between officials over the breakup of the company.
Shares in Tokyo Electric Power Co., operator of the stricken Fukushima Daiichi plant at the centre of an ongoing nuclear crisis, closed up 19.81 percent, or 65 yen, at 393 yen.
"I'm not aware of any facts," said Edano on Monday referring to a report in the Mainichi Shimbun on Sunday that government officials and TEPCO had discussed the breakup of the company and nationalisation of its nuclear power business.
When asked about the possible nationalisation, Edano said: "In the current plan submitted to the Diet, the government will indirectly obtain TEPCO stocks, this means that the plan is a partial and temporary nationalisation."
The government has put forward a scheme to ensure TEPCO meets huge compensation claims but worries for the firm's future remain as it struggles to resolve the crisis by January 2012.
TEPCO shares have lost more than 80 percent of their value since a wall of water crippled cooling systems at the Fukushima plant, with three reactors suffering meltdowns and the plant spewing radiation into the environment.
Around 85,000 people have been evacuated from their homes, farms and businesses in a 20-kilometre (12-mile) zone around the radiation-spewing plant, with evacuation pockets also further afield.
The price movement on Monday was "in part because of Chief Cabinet Secretary Edano's comments," a senior strategist at a major Japanese brokerage told Dow Jones Newswires.
"But the fact of the matter is that there are those who have been waiting for a movement and jumped on the momentum," he said.