Shares in Woolworths jumped 2p to close on 34.5p yesterday as investors speculated that the high street retailer could be the target of a takeover.

Analysts listed supermarket group Asda, Icelandic retail predator Baugur and WH Smith as possible interested parties.

Meanwhile shares in Tesco rose 4p to finish on 329.5p amid rumours that the retail giant is planning to make a bid for Dutch retailer Ahold.

Analysts believe that Tesco could be planning to join forces with private equity group Kohlberg Kravis Roberts to table an offer.