According to one Sunday newspaper, the Financial Services Authority is under pressure to investigate the dramatic movement in Sainsbury’s share prices towards the end of last week.

Shares in the UK’s number three supermarket chain shot up by three per cent in a flat market for retailers, amid rumours of a potential takeover bid.

But LibDem shadow trade and industry secretary said there is a “strong case for investigation”, and linked the share rise to the resignation from government of Lord Sainsbury, a leading shareholder.

Lord Sainsbury resigned on Friday, after the beginning of the rise of Sainsbury’s stock. His departure from government circles is seen as a sign his shares - which are held in a blind trust - will be sold, hence the takeover rumours.

This week’s most keenly anticipated events will be the first-half report from the grocery giant.

Merrill Lynch predicts Sainsbury's will post a 75 per cent rise in pre-tax profit to £260 million, but ABN Amro is more conservative, predicting a 59 per cent jump to £188m and recommends that investors sell the stock because "the share price has got ahead of itself and is discounting either large upgrades or a bid, neither of which we believe is likely".