Reversing the recent pattern, general retail stocks surged as bid speculation, stakebuilding and other chances of corporate action buoyed the sector.

Debenhams and Marks & Spencer were among those gossiped about as potential bid targets, but analysts wondered how long retail’s rally would last.

Depressing sales data from the BRC and another inflationary leap emphasised how difficult the trading environment remains.

Wellcome Trust emerged as a shareholder in Marks & Spencer, ending speculation about the identity of its mystery stakebuilder. France’s Halley retail dynasty and legendary investor Warren Buffett had both been talked of as potential buyers. Broker Blue Oar reiterated its buy advice on the retailer, arguing: “M&S is not a broken business and management are doing the right things for the medium term.”

Woolworths was also the subject of bid speculation as property tycoon and investor Ardeshir Naghshineh increased his stake to just over 10 per cent.

The acquisition made Woolies one of the week’s highest risers but, perversely, its shares fell back on Tuesday when a new chief executive – former Focus boss Steve Johnson – was appointed.

Kaupthing rates Woolies a buy, but said: “While this appointment looks sensible, the main catalyst in the share price at the moment is bid hopes.”

Tesco revealed it would make its long-planned push into India with a cash and carry business and partnership with local powerhouse Tata.

Oriel, advising hold, noted: “This is an interesting idea from Tesco, a company that is inexperienced in cash and carry. But the deal also shows that the company may evolve along more traditional retail lines.”

Pali International downgraded department store group Debenhams from neutral to sell, despite speculation that Icelandic investor Baugur might bid for it.

The broker believes Debenhams’s share price bounce was a good selling opportunity and noted: “Baugur is probably under even more financial pressure than Debenhams, so the recent story that it is about to bid 70p has very little credibility.”

N Brown’s share price rise in recent weeks prompted HSBC to shift its stance from overweight to neutral. The retailer had reached the broker’s target price of 225p, prompting the change.

Tycoon Sir Tom Hunter’s West Coast Capital is considering a bid for troubled Flying Brands, the AIM-listed home shopping specialist. The retailer said things are still at an early stage and there is no certainty a bid will materialise. West Coast holds a big stake in Flying Brands already.