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Shares in Apple rose more than 10 per cent yesterday - snapping a four-day losing streak - after China Mobile chief executive Wang Jiangzhou said his firm was in talks about a possible tie-up. China Mobile stock also jumped 9%.

Wang brushed off suggestions an agreement might come soon when he spoke to reporters on the sidelines of a conference in Macau. And a senior telecoms executive familiar with the situation told Reuters that Wang's comments had been blown out of proportion.

The iPhones - one of the hottest gadgets to hit US and European stores this year - might be incompatible with the Chinese telecoms market because of their "locked" SIM cards, meaning the device

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would not be able to piggyback on another operator's network.

"You have to realize Chinese SIM cards are not locked up, as the iPhones' are," the executive said on condition of anonymity.

"Secondly, our business model does not entail sharing revenue with terminal producers - we don't share revenue. That's a Chinese rule," said the executive. "All it is right now, on the iPhone and Apple, is that the firm welcomes their approach."

Gartner analyst Sandy Shen said it might be premature to start factoring in the launch of the iPhone for China, not least because of the high price the device would command - the US retail price is double the average monthly salary in China - and because China Mobile would resist departing from age-old practices.

"It's going to be just for the high-end users, a very niche product, for niche users," she said.

"For the iPhone, they're asking for sharing of the monthly fee, including the voice charge as well," she added. "This has never been done in China before. I'm not sure whether China Mobile would be willing to share a total monthly fee."

Shen added that, unlike in the US and Europe, where Apple operates the popular iTunes song-download service, Chinese users might initially be bereft of content.