A US investment bank stood by its prediction today that Apple would release a cheap iPhone this year, a forecast that sent shares in the company to an all-time high in America.

Shares in Apple shot up 2.5 per cent to $134.50 yesterday on the back of quotes attributed to a JPMorgan analyst that Apple planned to release a smaller version of its iPhone — which went on sale in the US two weeks ago — at the end of the year.

Kevin Chang, who works in the Taiwan office of JPMorgan, was quoted as saying that he "believed" that Apple would convert its iPod Nano into a phone because it was "probably the only way for Apple to launch a lower end phone without severely cannibalising iPod Nano".

The comments trickled across the internet overnight, and when the stock market opened in New York yesterday, Apple shares rose to an all-time high, eclipsing the $133.24 set the previous Friday.

Late Tuesday, however, another analyst at the firm was quoted as saying that while JPMorgan believed a "lower-end iPhone" was "inevitable", for Apple to release such a product in the near-term would be "unusual and highly risky".

The second analyst suggested that the next model of the iPhone was instead likely to be a "high-priced, non-subsidised model" with 3G capabilities, in remarks that were widely interpreted to mean that the bank had retracted Mr Chang's note.

A well-placed source at JPMorgan said today, however, that the suggestion of a retraction was "completely erroneous," and that the bank stood by the original note.

"In no way are we retracting what Mr Chang said," the source said. "We express our view through research documents, and the way the market reacts to them is a function of the market."

The apparent disparity between the two analysts' views simply suggested that the bank had "several analysts looking at the same stock", the source said.

The incident reveals the voracious appetite of the online community for news about Apple, which released its long-awaited iPhone in the US nearly two weeks ago, and the ability for reports about the company's plans to move markets.

Analysts have suggested that as many as 500,000 iPhones were bought within the first two days of its release.

Mr Chang's prediction about a $300 iPhone — the present models cost $499 and $599 — was based on an unnamed source in the supply chain, as well as a patent application filed by Apple this month for a "multifunctional hand-held device" with a circular control, similar to the Nano's scroll wheel.

The lower-end iPhone — which was quickly dubbed the "iPhone Nano" by bloggers — would have "limited functionality" in comparison with the existing iPhone, which is a combined phone, web browser and media player, Mr Chang said.

An Apple official declined to comment on the reports.

Apple shares closed up $2.02, or 1.5 per cent, at $132.35 yesterday.

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