A Qatari-backed investment fund has abandoned its takeover bid for supermarket chain Sainsbury's.

Delta Two, which approached the UK firm in July with the offer, said it was withdrawing the bid because of turmoil in global credit markets.

It also said concerns about funding Sainsbury's employee pension schemes had led to the move. Shares in Sainsbury's, which had yet to back the offer, fell nearly 19 per cent in response to the news.

Despite this, Sainsbury's said its future business prospects remained "attractive".