Keen as the company is to expand in Europe it just couldn't make the deal make financial sense.Another key reason is that a Tesco foray into France would have let Sainsbury off the hook at home. It would be reasonable to now expect a bounce in Tesco shares as institutions pile back in.The reasons for Tesco's decision and relief in the City are plain enough. They fell another 7p in a declining market to 276p yesterday.With Docks de France now likely to accept an enhanced offer from Auchan, Tesco has walked away from the big one even though it admits that it met Docks in France and considered making a move. Tesco's shares have taken a thorough beating in the past two weeks since it emerged that Sir Ian MacLaurin was considering mounting a rescue bid for the company to save it from the clutches of the French hypermarket group, Auchan. Tesco shares were trading at more than 300p at the beginning of this month but have since shed around 9 per cent of their value as the City became nervous that Tesco might wade in with a mega-bid and the mother- of-all rights issues to fund it. This detail did not arrive until a fortnight ago and additional information from British Gas was still being delivered as late as last night..

Tesco shareholders will breathe a huge sigh of relief if, as expected, the company decides not to intervene in the pounds 2.5bn bid for Docks de France, the French supermarket group. They would cut TransCo's revenues by 22-28 per cent from next April, with cuts of inflation minus 5 per cent until 2002.Last night British Gas refused to accept the Ofgas explanation for the delay. The company's deputy chairman, Philip Rogerson, said: "The information has been with them since March. It's very regrettable that we now have a three-week delay which increases uncertainty for our shareholders."The latest dispute centres on figures for TransCo's operating costs for the 12 months to the end of 1995.

Otherwise the delay would have been shorter."British Gas has described the current proposals, which are the subject of industry-wide consultation, as "the biggest smash and grab raid in history". The situation has been further complicated because Clare Spottiswoode, the director general of gas supply, goes on holiday for two weeks from Friday.An Ofgas spokesman said: "It's something Clare needs to deal with personally and she's not going to be here for a while. The proposals were expected to be revealed this week, but speculation that Ofgas was preparing a tactical retreat helped to boost the British Gas share price yesterday. Ofgas said it needed more time to consider additional information on TransCo's capital expenditure which it had only received a fortnight ago. Some feel the price cut has made the float more attractive; others believe the former Gateway supermarkets business still has fundamental problems.. The gas industry regulator, Ofgas, yesterday said it was to delay publishing the final version of its controversial price cap formula for the British Gas pipeline business TransCo until mid-August, as the war of words between the two sides intensified.

One said: "We often prefer to see companies at a late stage as there is usually more information around."NatWest is confident the retail offer, which closes tomorrow, will be over-subscribed.The City is split on Somerfield's chances of success. NatWest said that last week's reduction in the price from the original 180p-190p range down to 160p had tempted several investors to take a second look. Of the institutions seen, NatWest claims that more than half had expressed interest while other smaller funds were also getting involved. Some US institutions have expressed interest even though they were not targeted in the company's presentations. It is understood that some of the largest City fund managers have yet to meet Somerfield's management, though meetings are scheduled for the next two days. NatWest Securities, broker to the pounds 480m float, said it had received "quite a few" orders by close of business yesterday, though a number of institutions were still "biding their time".