Japan's third biggest retailer, UniQlo, is reported to be ready to sign contracts for two London stores.

The urban fashion specialist is looking to open four shops in London before extending its range outside the capital.

Trade magazine Retail Week said that UniQlo will sign up for a property in Covent Garden - its first outside Japan - this week. However, the shop will not open until 2002 and it is understood that it will also house a European head office.

UniQlo is controlled by Fast Retailing and has grown into one of the country's biggest clothing retailers despite only launching three years ago. It now has 400 stores and sells discounted basics similar in style to Gap, but cheaper.

The group is convinced the UK offers good opportunities as middle market businesses flounder.