SPECULATION is mounting that a deal is about to be struck for pottery firm Waterford Wedgwood.

Sources say a deal looks likely this week, and U.S. investment fund KPS Capital is thought to be the frontrunner.

The group, including historic potters Wedgwood and Royal Doulton, was placed into receivership last month.

KPS and private equity firm Clarion Capital are understood to be the main bidders, including Irish firm Waterford Wedgwood, but administrator Deloitte declined to comment.

Workers at the Barlaston plant say they would prefer to see Tom D Wedgwood and cousin Tom R Wedgwood, direct descendents of company founder Josiah Wedgwood, take control of the 250-year-old firm.

The Sentinel revealed last month that the pair are talking to financiers about buying the North Staffordshire operations and creating more jobs.

Garry Oakes, assistant general secretary at pottery union Unity, said he would be happy to see Wedgwood sever ties with sister company Waterford Crystal rather than face job losses in Barlaston.

He said: "If it meant production of the Wedgwood product remained at Barlaston then split it up.

"We want whoever takes over the Waterford Wedgwood brand to agree to keep production in North Staffordshire."

New York-based KPS has previously invested in production firms in the motor parts, engineering and paper-milling industries.

It is not known whether KPS plans to retain manufacturing operations in North Staffordshire if its bid for the group is successful.

About 500 Wedgwood workers are eagerly awaiting news of the deal.

One Barlaston worker, who asked not to be identified, said most members of staff were hoping the Wedgwood family manage to take control of the Barlaston operation.

She said: "We don't want KPS to get it because we all think they're going to send all the jobs abroad. They don't want us.

"We would much prefer the Wedgwood family to buy it. We haven't heard anything yet, but we have been told to have a clear-up and the old stocks are being smashed up so we think something is about to happen."

The two Wedgwood cousins have said they would call a halt to redundancies in the region, start recruiting within a year and move all Wedgwood production back from Indonesia.

When asked about the progress of the talks, a spokesman for administrator Deloitte said: "We don't have any updates at the moment, but as soon as we do we will let you know."