A rival bidder could be poised to gazump Morrisons' attempt to buy Safeway with a move coming as early as next Friday, a City analyst said last night.

Morrisons announced with a fanfare on Thursday its £2.9bn offer for the flagging supermarket chain but experts expect competitors will not allow the deal to go through without a fight.

Asda's parent company, American firm Wal-Mart, is favourite to launch a counter bid with rival Sainsbury also in the frame.

A move by either firm could be fatally flawed by their existing operations.

An extra hat was thrown into the ring late yesterday with the suggestion that Asda and Sainsbury might join forces to buy up Safeway then break up the group to share the spoils.

The intense speculation was reflected in a high volume of shares changing hands which left the two main players, Safeway and Morrisons ending brightly.

Safeway closed the day up 23.75p at 279.75p (9.3 per cent),

Sainsbury's was down 2.5p at 256p (one per cent) and Morrisons, up 10.5p at 190.5p (six per cent).

Morrisons' most appealing selling point in the store wars battle for Safeway is the potential synergy between the two firms. Safeway is predominantly Southern-based whilst the Bradford company is steeped in northern history.

Aside from a handful of areas in the country, not least Darlington's love affair with the two firms - both have a pair of outlets in the town - they appear to be two halves of a jigsaw.

Asda and Sainsbury enjoy greater global UK coverage and as such would conflict greatly on a much wider scale with the Safeway brand.

City traders have a headache determining which whispers are the red herrings as the stock exchange was yesterday high on hype and low on fact.

Anthony Platts, of Wise Speke's Teesside office, said: "There is currently a lot of gossip going on that a counter bid will come as early as next week. Retail insiders say a bid could come as soon as next Friday.

"Morrisons' bid is far from secure at the moment despite approval from Safeway's board. The Morrisons family speak for 35 per cent of shares so as far as they are concerned it is a done deal but not so for Safeway.

"An Asda bid would certainly be a referral to the Competition Commission board.

"Personally, I do not see it. I think there is a lot of rumour being made for the sake of it."

The Morrisons bid has caused a great stir in the City which was excited by the speculation and rumour surrounding the story.

Anthony Grezo, investment director at Newcastle stockbrokers Laing and Cruickshank, said: "The way the Safeway share price has moved since the Morrisons announcement would suggest there may well be an alternative bid from another player.

"The Safeway shares are now 'in play' and it is now looking interesting. You have an awful lot of speculators wading in now.