MILAN (Reuters) -Shares in Burberry (BURBY) rose as much as 8% on Monday after website Miss Tweed reported that Italy's Moncler was considering a bid for the London-listed luxury group to create an outdoor clothing specialist giant.

Moncler (MONC.MI), known for its puffer jackets, on Sunday said it would not comment on "unsubstantiated rumours" of a possible deal between the two luxury brands. Its shares were down 0.35% at 0930 GMT, slightly underperforming the sector.

Burberry, which had a market valuation of nearly 3 billion pounds ($3.9 billion) as of the last close, told Reuters it does not comment on speculation.

The company's shares were up 4.5% at 0930 GMT. The stock has plummeted about 40% so far this year.

Italian broker Intermonte said a possible deal between the two luxury groups is an "unlikely scenario", as Moncler would see the relaunch of such a large company as Burberry as risky.

"Given the ongoing work in progress for the acquisition of Stone Island by Moncler from 2020, which so far has somewhat disappointed the market, the timing might be surprising," UBS analysts said.

Burberry, known for dressing the English upper class in its classic camel, red, and black check prints, has lagged behind its peers as it struggles to revive demand for its clothing.

The British luxury group, which scrapped its dividend and issued a profit warning in July, will report its first half results on Nov. 14.

Broadly, luxury groups have struggled with tighter consumer spending in recent quarters, especially in China, with Moncler reporting a 3% drop in third-quarter sales last month.

Miss Tweed, a specialist fashion and luxury news website, reported "growing industry chatter" that Moncler could consider a bid for Burberry.

It added that LVMH's Chief Executive and controlling shareholder Bernard Arnault, whose luxury conglomerate recently invested in Moncler, is keen to see such a deal happen.

($1 = 0.7710 pounds)

(Reporting by Yamini Kalia and Prerna Bedi in Bengaluru, Elisa Anzolin in Milan and Helen Reid in London, editing by Abinaya Vijayaraghavan and Sharon Singleton)