Fairfax – which publishes BRW as well as the Sydney Morning Herald and The Age – has had a bit of a thing about QBE recently. It found it a bit hard to swallow its pride last week after it published a rumour that QBE was planning to merge with IAG. The two companies say the story was unfounded, but the media group won’t go as far as admitting a blunder.

Using the old journalistic ploy of “a source close to one of the companies”, the Sydney Morning Herald and The Age reported that IAG CEO Michael Hawker had been spotted at QBE’s Pitt Street offices.

The newspapers said financing talks had started. It was a great story, but both insurers say the visit had nothing to do with a merger. As online media outlet Crikey.com.au pointed out, the Fairfax “source” went from being named as someone “familiar with the proposal” to “a source close to one of the companies”.

“It’s obvious it was no better sourced than someone who saw… Michael Hawker walking into the QBE building, fleshed out by a bit of fluff from that person who ‘was familiar’ with the merger proposal that wasn’t.”

QBE CEO Frank O’Halloran said he had nothing to announce about any current mergers or acquisitions. He said he will continue to look at opportunities, but IAG isn’t one of them.

The insurers said Mr Hawker and QBE’s Australian MD Raymond Jones are directors of the Insurance Council of Australia and they often meet to discuss industry matters – even at QBE’s head office.

And just to underline how scuttlebutt can affect the “rational” workings of the market, both companies’ shares jumped more than 10 cents after the news broke.