While Liberty Global stressed it had no plans to make a bid, the purchase of BSKyB's holding for £481 million excited investors and sent shares six per cent higher.
The developments provided welcome relief for the London market as the FTSE 100 Index gave up a large slice of the gains seen in the previous session to finish 46.4 points lower at 6738.3.
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Markets reacted uneasily to the latest round of sanctions against Russia.
Gernany's Dax and France's Cac 40 both turned sharply downwards, losing more than 1 per cent in value.
They reversed a decent performance for markets on Wednesday, driven by stronger economic growth figures in China and a raft of well-received US corporate updates.
New York's Dow Jones Industrial Average was also in the red but the decline was more muted as traders weighed up mixed US economic data - suggesting a better picture on unemployment but a fall in house building.
On currency markets, the pound edged lower from recent highs sparked by expectations of an interest rate rise.
Sterling dropped just below 1.71 US dollars, and against the single currency moved down towards the 1.26 euro level.
In London, a shortened risers' board was topped by ITV after BSkyB sold the final piece of the 17.9 per cent stake it took in 2006 in a move that at the time scuppered a takeover of ITV by NTL, which later became Virgin Media.
ITV shares surged 11.3p to 195.1p, while BSkyB was 7.5p higher at 897.5p.
Elsewhere in the top flight, shares in Sports Direct International were 2 per cent lower.
This was after its annual results failed to provide any clues for investors about when the company might pay its first dividend.
Profits rose 16 per cent to £239.5 million for the year to April 27 but the group said it was keen to retain flexibility for future growth opportunities. There was also a fall for energy supplier SSE - off 20p to 1523p - after it blamed "very competitive market conditions" for a drop in electricity and gas customer accounts from 9.1 million to 8.99 million by the end of June.
The business, which trades as Southern Electric, Swalec and Scottish Hydro, also saw gas usage plunge 29 per cent and electricity fall 7 per cent due to milder weather.
The biggest risers on the FTSE 100 Index were ITV up 11.3p to 195.1p, Imperial Tobacco up 49p to 2679p, Meggitt up 9.5p to 546.5p and Ashtead up 15p to 907p.
The biggest fallers on the FTSE 100 Index were Hargreaves Lansdown off 47p at 1115p, International Airlines Group down 10.3p to 330.7p
Rexam was down 16p to 520.5p and Barclays down 5.8p to 210.2p.