Quoting French market regulator AMF, the London-based MarketWatch reported Zaleski''s fund management firm, Carlo Tassara, had bought 1.3 million shares of Arcelor on Thursday. It said the purchases brought Carlo Tassara International''s total Arcelor holding to 49.85 million or 7.8 per cent of Arcelor''s capital, up from 5 per cent.

The firm also said that Zaleski''s firm also met with Russian steel maker OAO Severstal adding that details of the meeting weren''t disclosed by Severstal, who announced the meeting.

Spanish investor Jose Maria Aristrain, with 3.55-per cent stake in Arcelor, also opposed the Severstal merger. Colette Neuville, another shareholder with a 2.3-per cent stake had moved court to thwart Arcelor''s proposed share buyback plan.

Mittal Steel, Arcelor and Severstal have also launched an advertisement blitz ahead of the Arcelor board meeting due on Sunday.

A Mittal Steel advertisement in the Financial Times said, "Arcelor shareholders, vote ''No'' to the forced Severstal merger," while a Severstal advertisement said it was pleased with the "high level of support expressed for our transaction", which it said was "extraordinarily compelling".

Arcelor, meanwhile, placed an advertisement in Belgian newspapers L''Echo and Le Soir asking shareholders: "Is it better to be everywhere or there where it matters?" and said a tie-up with Severstal would be better than with Mittal Steel as it would place Arcelor in key economies.

Severstal also got the backing of the Russian government with Russia''s industry and energy minister saying on Friday that he was optimistic about a merger between Severstal and steel giant Arcelor, though he admitted there were complications in the mooted deal.

Severestal owner Alexey Mordashev, who had revised his merger offer under pressure form Arcelor shareholders, has already agreed to a lower stake of 25 per cent stake in Arcelor against the earlier bid for 32 per cent.

Mittal Steel, meanwhile, said it is in "advanced" and "constructive" talks with Arcelor. The company, however, refused to divulge the nature of the discussions or speculate on the likely outcome.

Reports quoting industry sources hinted at a likely climb-down by Mittal Steel, which may raise its earlier €23.2 billion ($29.2 billion) bid. This may be needed to win support from the Arcelor board.

Mittal already had yielded ground on the corporate governance plans and analysts say price is the only remaining hurdle. The two sides will now have to negotiate the final price to be paid for Arcelor.

Alternatively, Mittal Steel could accept a minority stake rater than raising its bid amount for a merger with Arcelor, reports quoting source close to Arcelor said even as talks between the two continued.

Arcelor also made a climb-down saying that it will not value its shares below €40 against its buyback plan at €44. Mittal''s current bid values Arcelor shares at 37.74 euros.