Shares in J Sainsbury gained in a falling market this morning driven by speculation that the Qataris were looking to increase their 17.4 per cent stake.

The talk came at the same time as an announcement that the states of Qatar and Dubai have joined forces to create a $1 billion (£500 milion) fund to buy shares in major overseas listed companies and build a long-term investment portfolio, although this

By 11am Sainsbury shares were up 8.5p at 559.5p on some 15 million traded. There was speculation that the Qataris were looking to increase their stake to just below the 30 per cent threshold that would trigger a bid.

Quatari-backed investment fund Delta (Two) revealed in April that it had acquired its stake in Sainsbury, making it the UK supermarket’s biggest shareholder.

The new Qatar-Dubai company a deal will have a capital of 3.7 billion dirhams ($1.01 billion), according to WAM, state news agency of the United Arab Emirates, which includes Dubai.

The agency quoted a minister Mohammed Abdullah al-Gergawi as saying: “There are many strong common human and economic factors between the UAE and Qatar that enable them to establish a giant investment portfolio in long-term investment projects and acquisition of the shares of major companies listed on global stock markets."

He said the fund would also target shares in North Africa and the Middle East.

Government-controlled companies in Dubai have been scouring the globe for assets for years. Their acquisitions this year include stakes in HSBC Holdings and Deutsche Bank

The Qatar Investment Authority has already said that it is interested in acquiring 10 per cent of Airbus parent EADS, the Franco-German defence company and state-owned Dubai International Capital last month also said it was in talks about buying a stake in EADS.

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