Traders in London and Frankfurt said there was talk of the 154-year-old maker of raincoats and handbags bieng subject of a bid at 1,500p per share.
The group, one of the few global luxury groups not to be family-owned, has been the subject of bid rumours for months as sales at top-end brands recover, driven by strong demand from Asia.
"The main attraction is its free float and it's not got a controlling family holder. It's the only luxury group that is independent," said one trader. "It's a good company, actually, very well run."
Takeover speculation has intensified after French luxury group LVMH bought a 17 percent stake in peer Hermes in October. However, some traders and analysts are sceptical whether a bidder would target Burberry, whose shares have more than doubled this year, driven by strong results as well as the takeover talk.
"The only bidder I can see paying this kind of multiple is a Chinese (company] looking for a trophy asset," said one trader.
Private equity firms have often been tipped as potential suitors, although Citi analysts have poured cold water on this.
"We see little strategic or financial rationale for private equity money to enter at such a late stage in Burberry's transformation story," they wrote in a recent research note.
Seymour Pierce last week introduced a "buy" rating on the stock and praised its geographical and product mix. Burberry shares closed up 26p at 1,156p.