Littlewoods is to close 126 of its Index catalogue-based outlets, fuelling speculation that a deal for its 119-strong Littlewoods stores chain could be imminent.

The company owned by the Barclay brothers have asked UBS, the merchant bank to launch a formal sale process for the chain.

Asda is believed to have offered £500m for the business in January, and this time it is expected to face competition from Primark, the discount clothing retailer owned by Associated British Foods and New Look.