Swiss watchmaker Swatch Group has denied rumors that it is working with Apple on a wearable device with interactive functions.

Tech site VentureBeat said in a report on July 23 that Apple was working with "at least one partner, Swatch," on a smartwatch project, citing unidentified sources.

A spokeswoman for Swatch Group said the report was "unfounded," according to Reuters.

She added that the only business relationship Swatch Group had with mobile phone makers was as a supplier of integrated circuits and other electrical components.

Signs are pointing that Apple is preparing to launch an "iWatch" device, after seeing rivals like Samsung and LG Electronics release wearable devices of their own.

The rumor came as some surprise since Swatch Chief Executive Nick Hayek Jr. said in 2013 that he didn't think an Apple smartwatch would be a big deal.

Hayek said that an "interactive terminal on your wrist" would be hard since there is limited space for an adequate display.

Swatch, along with Fossil and Suunto, produced watches using Microsoft's now defunct Smart Personal Object Technology (SPOT) platform.

Their work is now considered the first-foray into the smartwatch world, according to AppleInsider.com.

Morgan Stanley said earlier this month that they expect Apple to sell its iWatch for $300, with a 40 percent to 50 percent profit margin on each device sold.

The device is expected to come with a waterproof, sapphire-coated, flexible Amoled display.

Apple's recently released HealthKit software is expected to help the iWatch accumulate information about exercise.

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