Takeover talk sees Ocado shares increase

Talk that a suitor such as Bradford-based supermarket group Morrisons could be interested in the online grocer, which first surfaced in November, was cited as a possible reason for Monday's gain.

Both Ocado and Morrisons declined to comment on the speculation, but analysts dismissed it as unlikely that Morrisons would buy Ocado.

Earlier this month Morrisons' chief executive Dalton Philips played down speculation Morrisons might bid for the online delivery company, saying it is focused on testing its own online business.

When asked if Morrisons was interested in buying Ocado at the group's Christmas trading update on January 10, Morrisons' finance director Richard Pennycook said: "The way the stock market works, if there was anything real there, the authorities would have made us say something.

"The fact you've heard nothing gives you a pretty clear steer that these are rumours."

Mr Philips, who joined Morrisons last March, plans to boost the group's profits by expanding into fast-growing areas like convenience stores and internet shopping.

Yesterday a trader said talk of an increased stake from a US investor is boosting Ocado's shares stock, while another trader said the rise in the share price is forcing investors to cut hefty short positions.