Hedge funds that bet against the fortunes of online grocer Ocado were left nursing big paper losses on Thursday, after the company's shares surged more than 40% on the back of a new US tie-up agreement.

More than 7% of Ocado's shares are short-sold by hedge funds, who are betting the price will fall, making it one of London's most shorted stocks, according to the latest data published by the Financial Conduct Authority. The high-profile hedge fund Marshall Wace has placed one of the biggest wagers against the firm.