Telefonica shares were up 6% at 3.78 euros in early morning trading, on track to its best day since Nov. 22, 2021. The share is the top gainer in the STOXX 600 index.

State holding company SEPI said on Tuesday it would buy the shares in a way that would minimise the impact on market price though it did not give a time frame.

A 10% stake had a market value of around 2 billion euros ($2.19 billion) as of Tuesday evening.

The move is a response to the STC announcement it had built a 9.9% stake in Telefonica in September.

($1 = 0.9118 euros)

(Reporting by Jakub Olesiuk, editing by Inti Landauro)