RETAILER Tesco has gathered an £810m war chest to help protect its position as the UK's leading supermarket group.

The company said the fund would give it greater "flexibility and firepower" to fend off rivals.

The announcement came the day after retail research group Verdict predicted store wars as Morrisons' acquisition of Safeway neared completion.

Tesco is celebrating its continued domination of the supermarket sector with another bumper set of sales figures for the Christmas period.

Tesco achieved a total rise in UK sales for the seven weeks to January 3 of 15.4 per cent.

Tesco said growth was seen across the board, with its home entertainment business achieving a sales rise of 29.4 per cent after strong demand for DVDs and CDs.

Sir Terry Leahy, chief executive, said: "Now is the right time to strengthen our finances further so that we can take full advantage of the opportunities available."