The retail sector again provided a focus for the London equity market yesterday.

News that Baugur, the Icelandic retailer, had teamed up with property mogul Robert Tchenguiz, Apax Partners and Barclays Capital to make an approach for Somerfield hit shares in the supermarket group as traders saw their best hope of a bidding war receding. Somerfield shares fell 0.9 per cent to 212p.