A website created to look like Bloomberg News claimed the social network was being taken over by an unnamed bidder for $31bn.
Twitter shares shot up after a fake online news story claimed the company had received a mystery $31bn (£19bn) takeover offer.
A story purporting to be from Bloomberg News – but actually published on a lookalike site – claimed the social network was being eyed by an unnamed bidder.
The fake report claimed that “people with knowledge of the situation” said bankers were working with Twitter to consider an offer.
But a Bloomberg spokesman used the company’s Twitter account to warn people that the story was fake, a clarification which saw the company’s share price drop back down to its pre-rumour level.
Shares in Twitter ended the day 3% up at $37 (£23).
The fake news story appeared on a website with the Bloomberg.market address, rather than the official Bloomberg.com domain.
It linked to a homepage showing the same stories as the real Bloomberg site, but only some of the links worked.
Increasing numbers of traders rely on social media to get the edge on market news.
Rumours of a Twitter takeover have been swirling since former chief executive Dick Costolo announced his resignation last month.
Among those who analysts believe could be interested in purchasing Twitter is search giant Google.
Source: Sky News