FRANKFURT (Reuters) - German home improvement retailer Praktiker's (>> Praktiker Bau und Heimwerkermaerkte AG) insolvency prompted speculation on Friday that its outlets may be sold to rivals seeking market share in Europe's biggest economy, such as Kingfisher (>> Kingfisher plc) or Hagebau.

Praktiker (>> Praktiker Bau und Heimwerkermaerkte AG), Germany's third-biggest home improvement store chain and a household name in the country, filed for insolvency on Thursday after talks with creditors failed, sending its shares into freefall and triggering fears of heavy job losses.

German daily Boersen-Zeitung said on Friday that Britain's Kingfisher, Europe's biggest do-it-yourself retailer, was interested in parts of Praktiker, without saying where it got the information.

Kingfisher, which is already invested in the German home improvement market via a stake in Hornbach (>> Hornbach Holding AG), declined to comment on Thursday whether it was interested in buying any of Praktiker's outlets.

Meanwhile, Handelsblatt Online quoted the chief of smaller rival Hagebau as saying it could buy some Praktiker stores.

"We are interested in principle," Handelsblatt Online quoted Heribert Gondert as saying.

Praktiker's shares were up 12.3 percent to 0.146 euros by 0925 BST on Friday, after losing 65 percent of their value on Thursday.

The company was once worth almost 2 billion euros (1.7 billion pounds), but as its performance slipped in the economic downturn, its market capitalisation has shrunk to only about 15 million euros now.

A Hamburg court on Thursday named lawyer Christopher Seagon as preliminary insolvency administrator, putting him in charge of drawing up a restructuring plan for Praktiker.

With annual sales of about 3 billion euros, Praktiker is Germany's third biggest home improvement store chain after OBI and Bauhaus and ahead of Hornbach.

Industry leader OBI is not interested in Praktiker's stores, parent company Tengelmann's chief Karl-Erivan Haub said on Thursday.

(Reporting by Maria Sheahan; Additional reporting by Neil Maidment and Alexander Huebner; Editing by Mark Potter)