Billabong shares have staged a partial recovery after the troubled retailer reassured investors it was still in takeover talks with two potential suitors.

Billabong shares plunged more than 20 per cent on Thursday before the company requested a trading halt to investigate the sudden sell off.

Some market watchers had speculated the two private equity firms, who each had made a $1.10 a share offers for the surfwear company, had pulled out of negotiations.

But late on Thursday Billabong confirmed the talks with the Sycamore and Altamont/VF consortiums were continuing.

Billabong shares recouped some of their losses on Friday, closing 5.5 cents, or 7.91 per cent, higher at 75 cents.

CMC Markets strategist Ric Spooner said the shares were driven by investors' expectations on whether a takeover would go ahead.

"The fact that it is trading so far below the offer, and yesterday's fall, gives you an insight into what might be before investors if there is no takeover offer," he said.