Shares in Morrisons rose 18p to finish on 251.5p yesterday following the release of the supermarket group's half-year results.

Morrisons reported a half-year pre-tax profit to 23 July of £134.2m, against a loss of £82.1m the year before - its first profit since acquiring Safeway two years ago.

It also said that sales during the period had remained flat at £5.85bn, reflecting store disposals, and that like-for-like sales in the first eight weeks of the second-half increased 5.9% excluding fuel.

Analysts immediately upped their full-year forecasts for the retailer, with Citigroup increasing its forecast from £252m to £280m and Man Securities upping its forecast from £233m to £264m.

The City also welcomed the news that Morrisons' new chief executive officer Marc Bolland was carrying out a review of the company.

Richard Ratner, an analyst from Seymour Pierce, added: “In our opinion there is considerably more upside in Morrisons that in Sainsbury's.”