British music, books and games retailer HMV is considering its position with respect to Mama Group, fuelling talk it will launch a trump bid for its live music joint venture partner.

Mama rejected on Wednesday an improved £38.4 million ($62.4 million) bid from its biggest shareholder, investment group SMS Finance.

Shares in Mama were up 12.2% at 5.25 pence (8.5 cents) at 1225 GMT, above Luxembourg-based SMS's latest offer of 4.75 pence, signalling that investors are expecting a better bid.

HMV declined to say whether it was considering an offer for Mama Group, after the Times newspaper said it was a possibility.

The two firms agreed a venture in January that saw HMV investing an initial £18.2 million ($29.6 million) to take a 50% stake in a newly established vehicle, Mean Fiddler Group Ltd, which owns 11 Mama venues including London's Hammersmith Apollo, now branded the HMV Hammersmith Apollo.

At 1230 GMT, HMV shares were flat at 106.7 pence ($1.73).

SMS Finance, the investment vehicle of Italian entrepreneur Silvio Scaglia, owns a 29.8% stake in Mama and had previously offered 3.7 pence (6 cents) a share.

MAMA rejected both bids as too low.