Hopes of a bidding war for British Energy were dealt a blow on Wednesday after it emerged that Vattenfall, Suez and Eon were not planning to bid for the UK nuclear group.

This leaves RWE and EDF as the most likely companies to bid for the UK government’s 35 per cent stake in British Energy before the deadline of next Friday, May 9. Buying this stake could trigger a full takeover of the company, which at Wednesday’s closing price of 760p, down 8p, had an equity value of roughly £12.2bn.

Several of Europe’s largest energy companies have been in talks with British Energy, which, as well as being the UK’s largest generator of electricity, owns the best sites for building new nuclear reactors in the UK.

But many of these companies on Wednesday either ruled themselves out or said they would not overpay for the British Energy stake, making a bidding war less likely.

Vattenfall, the Swedish state-owned energy company, had been talking to British Energy but decided at a board meeting earlier this week not to pursue a bid.

That decision came after the Swedish government expressed fears that a bid would contradict its policy of phasing out nuclear power. Officials for Fredrik Reinfeldt, Sweden’s prime minister, and Maud Olofsson, the minister for energy, declined to comment, although others who asked not to be named confirmed the doubts.

Vattenfall is run as a commercial company with an independent board but is 100 per cent owned by the government.

The company remains keen to expand into the UK power market and is looking at the possibility of building new nuclear plants on sites owned by the Nuclear Decommissioning Authority, the UK government body responsible for shutting down and cleaning up the country’s oldest reactors.

Lars Josefsson, Vattenfall’s chief executive, said he wants to expand the company geographically and made clear when it announced first-quarter results on Tuesday that he was “interested” in the UK market.

Franco-Belgian utility Suez and Eon of Germany have also been in talks with British Energy for some time, but people close to both companies on Wednesday played down expectations that they would submit bids.

Suez is concentrating on completing its merger with Gaz de France. A person close to the group said it was “not Suez’s style” to get involved in auctions for assets or bidding wars.

RWE of Germany and EDF are the frontrunners to bid for British Energy, but both have been keen to stress their discipline when it comes to not overpaying for acquisitions. Jürgen Grossmann, RWE chief executive, said on Tuesday that it was interested in expanding its nuclear investments outside Germany, but added “we won’t engage in bidding wars”.