LONDON, Aug 20 (Reuters) - Shares in Morrisons (MRW.L) jumped above the level of an agreed takeover offer from U.S. private equity group Clayton, Dubilier & Rice (CD&R) on Friday, indicating a protracted bid battle for the British supermarket group may yet have further to run. The UK"s fourth-largest grocer is the subject of the most high-profile deal amid a raft of bids and counter bids playing out in Britain, reflecting private equity"s appetite for UK Plc. read more The latest twist in the saga came late Thursday when Bradford, northern England, based Morrisons said its board would unanimously recommend CD&R"s 285 pence a share offer worth 7 billion pounds ($9.5 billion) and drop its previous recommendation for a 6.7 billion pound bid from a consortium led by SoftBank (9984.T) owned Fortress Investment Group. read more The latest offer represents a 60% premium to Morrisons" share price before takeover interest emerged in mid-June. However, shares in Morrisons, which lags Tesco (TSCO.L), Sainsbury"s (SBRY.L) and Asda in UK market share, were up 4.3% at 291.2p by 1128 GMT on hopes Fortress will return with an even higher bid before shareholders vote on CD&R"s offer at meetings expected around the week of Oct. 4. Major Morrisons investors Silchester, M&G (MNG.L), JO Hambro and Schroders declined to comment on their intentions. Having previously said it is "committed to becoming the new owner of Morrisons", Fortress has now said it is considering its options and urged shareholders to take no action, pending a further statement. If Fortress remains keen it is also possible the Takeover Panel, which governs deals in the UK, could instigate an auction process. Analysts said the Fortress consortium, which also includes Canada Pension Plan Investment Board, Koch Real Estate Investments and Singapore"s sovereign wealth fund GIC, certainly has the firepower to go higher. The question remains however whether it can make a return on its investment at a higher level without needing significant asset sales. Morrisons, which has more than 110,000 staff and a largely freehold store estate, is unique among British supermarkets in making half of the fresh food it sells. It owns meat and fish processing sites and even its own trawler. Analysts have speculated that Amazon (AMZN.O), which has a partnership deal with Morrisons, could also still enter the fray, though most believe it would have done so by now if interested. read more TESCO FRIENDS REUNITED CD&R has former Tesco boss Terry Leahy as a senior adviser and a takeover of Morrisons would reunite him with its Chairman Andrew Higginson, Chief Executive David Potts and Chief Operating Officer Trevor Strain, who all worked with him at Britain"s biggest retailer. read more Potts would make 10.3 million pounds by selling his shares to CD&R, while Strain would pocket 4.1 million pounds. In line with the assurances Fortress had given, CD&R has committed to retain Morrisons" existing management and execute its strategy. It does not plan material store sale and leaseback transactions. One change that is expected is CD&R could combine its 918 Motor Fuel Group (MFG) fuel forecourts with the 339 owned by Morrisons, opening Morrisons convenience stores on the sites. That could face scrutiny from the competition regulator. Earlier this year, when rival Asda was sold to TDR Capital and the Issa brothers in a 6.8 billion pound deal, the regulator insisted on petrol forecourt disposals. read more ($1 = 0.7337 pounds) Reporting by James Davey; Editing by Kirsten Donovan Our Standards: The Thomson Reuters Trust Principles.