Mr Stuart Rose, chief executive of Marks and Spencer, yesterday came under increased pressure to return capital to shareholders after he spurned Mr Philip Green's £8.3 billion (€12.43 billion) proposed takeover.

Many of the retailer's largest investors dismissed Mr Green's latest proposal, worth "not less than" 370p a share. Mr Edward Bonham-Carter, chief executive of Jupiter Asset Management, said: "This is not a knock-out blow."

However, Mr Robert Talbut, chief investment officer of Isis Asset Management, said: "The pressure on Rose has now ratcheted up." Investors said Mr Rose could raise more debt against the group's large property portfolio and return capital to them.

They also urged him to raise funds from the group's financial services arm, for example by selling it or by securitisation.

Mr Green's latest proposal was delivered on Wednesday but was rejected by the M&S board, which said it "significantly undervalues the group and its prospects".

One shareholder said the board was wrong to have rejected Mr Green's proposal without more negotiation.

M&S shares fell 1.86 per cent to 356¾p as investors doubted whether Mr Green would improve his terms.

One top-10 M&S shareholder said: " reckon Green has a 40 per cent chance of winning; Rose has a 40 per cent chance of mounting a successful defence after signalling big changes to the balance sheet and a 20 per cent of chance of getting away with just promising to run M&S better."

It also emerged that, in raising his proposed offer from the £7 bn-plus he tabled three weeks ago, Mr Green has had to cede some control to his backers.

He will remain the largest investor in his Revival Acquisitions bid vehicle but his holding will drop below 50 per cent.