THE future of nuclear power generator British Energy looked no closer to being settled yesterday as contradictory signals emerged from those close to the negotiations.

Energy minister Malcolm Wicks announced yesterday that the Government would prefer to see French power giant EDF take control of the Gloucester-based company.

But one of the key City investors in the company, Invesco, has said it would prefer a partnership deal to be struck with the Centrica – the owner of British Gas. The future of British Energy – which owns Hinkley Point B reactor in Somerset – is seen as a key issue for the Government, which is keen to press on with proposals to build the next generation of nuclear power stations.

Mr Wicks gave an interview yesterday in which he described the proposed deal with EDF as "the most sensible option". He also said: "We think that's the natural link."

The French company is seen as the natural choice to build a new generation of nuclear power stations thanks to its expertise and experience in France. Nuclear power generates about 80 per cent of France's requirements and all the stations were built and are run by EDF.

Last month a proposed £12 billion takeover fell apart when two investors claimed the valuation of British Energy, which employs several hundred people in the regions, was too low.

Mr Wicks said that while the UK government was "very intimately involved" in the negotiations – it owns about 35 per cent of British Energy's equity – the group's future was "very much in its own hands".

And Neil Woodford, the head of investment at Invesco, British Energy's biggest institutional shareholder, is backing the partnership deal with Centrica, in which he also has a large holding.

Invesco currently has a 15 per cent stake in British Energy and five per cent of Centrica. The groups says that the proposals have been put to the boards of both companies.

It is understood the plans also include a role for EDF, and are designed to help the companies to "come together that they can work with EDF to build nuclear sites".

The original bid was rejected by Invesco and M&G – British Energy's second biggest institutional shareholder. It is understood both companies were looking for a figure closer to 900p a share for their stakes.

Centrica has also stated that it would consider a minority stake in British Energy should a third party buy it.