NEW YORK - Bonds of Sprint Nextel surged on Monday following a newspaper report that Deutsche Telekom is mulling a bid for the company.

Sprint Capital Corp's 6.875 percent bonds due in 2028 rose to 78.5 cents on the dollar, up 4.25 cents on the day, according to MarketAxess.

Britain's Sunday Telegraph reported that German telecommunications company Deutsche Telekom has appointed Deutsche Bank to advise on a possible bid for Sprint. A spokesperson at Deutsche Telekom declined to comment. (Reporting by Dena Aubin; Editing by James Dalgleish)