SAINSBURY stock surged yesterday after 250 million shares - the equivalent of 14% of the food retailer's capital - were reported to have changed hands, sparking speculation in the City that a fresh bidder may want to buy the UK's third-largest supermarket group.

Shares in Sainsbury climbed 7%, or 38p, to 568p by the close of London dealing.

News of the stakebuilding spread through the Square Mile like wildfire, prompting investors to pile into shares in other food retailers such as Wm Morrison and Tesco.

Retail industry analysts said a consortium of buyers, perhaps led by the Tchenguiz brothers, was behind the buying spree.

The extraordinary level of interest sparked speculation that Sainsbury may be the subject of a fresh bid, just two weeks after CVC, the private equity group, failed to gain control of the retailer with a proposed £11.4bn offer.

Analysts said they had heard rumours that Three Delta, an investment group backed by money from the Qatar Investment Authority, was preparing a raid for shares in the grocer. The shares were thought to have been sold for 575p, a near 10% premium to the previous close of 530p.

Three Delta is run by Paul Taylor, an associate of Robert Tchenguiz, the property entrepreneur. It has been suggested that Three Delta and Tchenguiz, who owns 5% of Sainsbury, could join forces to press the supermarket group to leverage its multibillion-pound property portfolio.

Alliance Bernstein, the global asset management company, held 254 million Sainsbury shares before yesterday's dealing, according to data from Reuters, and is thought to be the latest seller. Alliance Bernstein would not comment.

Supermarket groups have been seen as takeover candidates because of their sizeable property portfolios. Sainsbury rival Wm Morrison has also been touted as a possible target.

Tesco, the UK's largest supermarket, recently pleased investors when it released an additional £1.5bn to shareholders through a share buyback financed by an aggressive property sale-and-leaseback from its £28bn stores estate.