Shares in National Express rose for a third session in a row today after its largest shareholder backed a proposed merger with arch-rival Stagecoach.

They were up 15½p to 417p, adding to gains earlier this week, after Jorge Cosmen, who is also deputy chairman, said he would support the approach.

National Express shares tanked nearly 30% on Friday after a consortium led by Spain's Cosmen family and including private equity house CVC and Stagecoach abandoned a rescue takeover bid.

The deal valued the bus and trains operator at 500p a share or £765 million.

Stagecoach, which was set to buy National Express's UK bus and rail operations if the Cosmen deal succeeded, has since expressed interest in bidding on its own.

It is putting together a proposal which would see it own 60% of the combined group — something National Express is not keen on.

Instead, debt-ridden National Express wants to secure its future through a rights issue of £300 million to £350 million.

The Cosmen family, which owns 19% of National Express, is supportive of a rights issue but is thought to prefer a merger with Stagecoach.