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Tesco (TSCO) is set to be sued by a group of large investors who claim to have lost £150m because of the accounting scandal at the supermarket.

News of the potential law suit comes as Tesco is set to update the City on its first-half figures on Wednesday, with analysts expecting further signs that the retailer is firmly in recovery mode.

A group of 60 unnamed asset managers, hedge funds and pension funds will file the lawsuit against Tesco in the next month, according to Stewarts Law, which is leading the action, and litigation funder Bentham Europe.

The claim follow three former Tesco executives being charged with fraud and false accounting by the Serious Fraud Office (SFO) last month charged as part of a continuing criminal investigation.

The SFO started its inquiry in October 2014, after Tesco revealed a black hole in its profits of £263m, which was later revised upwards to £326m.

Bentham Europe alleges that Tesco failed to provide the market with accurate information, which then harmed its investors as the share price plunged. Jeremy Marshall, chief investment officer of Bentham Europe, said that investors had “suffered substantial losses”.

The share price at Tesco has fallen by about 20% since the accounting scandal emerged, but the stock has been on the up (by 22%) in 2016 as CEO Dave Lewis’ turnaround plan has gained traction.

Recent market share date from Kantar Worldpanel revealed Tesco’s best performance for two years and a half-year update on Wednesday is expected to show further recovery.

Like-for-like sales are forecast to be up 0.9% and pre-tax profits up from £74m a year ago to £333m for the six months to the end of August, according to Bruno Monteyne at Bernstein. Consensus from the rest of the City is slightly below Bernstein, but all expected further progress to be announced.

Monteyne said the recover was on track: “Engaged store managers and improved supplier relationships, a pricing strategy that’s challenging even the discounters, revitalised own label, including Farm Brands and Tesco Finest, high volume growth and a revival of sales growth in big box formats are all positive indicators backing up the strong momentum behind the business.”

However, analysts also highlighted a growing pension deficit, which is expected to have doubled to £5bn, as a drain on Tesco resources.

“A likely major increase in the group’s pensions deficit may serve as a reminder of competing claims on Tesco’s cashflows,” Jefferies added.

Tesco’s shares are down 0.3% this morning to 182.5p.

Morning update

It is a slow start to the week, with little else happening on the markets this morning.

Nestlé and R&R have completed the transaction to create Froneri, a new joint venture in ice cream, frozen food and chilled dairy.

As announced in April, Froneri will combine Nestlé and R&R’s ice cream activities in Europe, the Middle East (excluding Israel), Argentina, Australia, Brazil, the Philippines and South Africa.

Froneri will also include Nestlé’s European frozen food business (excluding pizza and retail frozen food in Italy), as well as its chilled dairy business in the Philippines.

This week in the City

Tesco’s half-year results are the big story of the week, but there is little else in the calendar apart from a quarterly trading update from Greggs tomorrow.